Bridging Loans for Limited Companies

Bridging loans are available to everyone, from individuals to limited companies, and are secured against residential or commercial property. Our advisers are able to guide you through the process of getting a bridging loan for your limited company, connecting you with the most suitable providers, rates, and deals.

If you’re a limited company looking to complete a commercial transaction, then you’ll need to have readily available finance. commercial bridging loan assists in providing limited companies with short term funds, using business assets as collateral.

Whether you are first setting out in business or are an established entrepreneur, there will be instances where cash flow issues are inevitable, and business loans may be required.

Here at Bridging Options, we’ll explain how commercial bridging loans can assist your limited company in maximising its earnings whilst minimising its risks.

The benefits of commercial bridge loans for limited companies

One of the biggest benefits to becoming a limited company is that it allows the owner to separate their personal entity from their business venture. This means that the owner’s liability is limited to the amount of money and assets that they have invested, ensuring that they are not personally liable for any company debts, such as a commercial bridging loans.

If you do decide to take a commercial bridging loan for a limited company, then your lender will want to know how you intend to repay the loan back.  As a limited company you will be expected to put down some form of assets already owned by the business as security, should you fail to make the repayments. If the loan carries significant risk, then the personal assets of the directors may also be required for security of the payment.

All lenders will have a slightly different set of criteria for what they will accept for securing bridging finance, but the types of business assets generally used as collateral include:

  • Business property such as offices, factories, equipment and furniture.
  • Stakes and shares in the company.
  • Client invoices and sales.

At Bridging Options, we can help safeguard your personal assets by providing your limited company with a bridging loan. Here to advise and support you every step of the way, we’ll assess your current business assets, guide you through the financial legislation and recommend how best to secure a commercial bridge loan for a limited company.

who limited companies need bridging loans

Why limited companies need bridging loans

A commercial bridge loan is exactly as the name suggests – a short term funding option for borrowers who wish to use the money specifically for business purposes.

Commercial bridge loans can start from as little as £25,000 and can go up to as much as £250million, depending on the assets put forward and the lender’s discretion.

For limited companies, this financial investment may be used to purchase equipment or machinery, to refurbish existing offices, relocate to larger premises and even finance commercial buyouts. 

Why are commercial bridge loans unregulated?

If you are a limited company and require a commercial bridge loan, then you will need to contact a specific type of lender, such as Bridging Options.

There are two types of bridging loans (classed as regulated and unregulated), with commercial bridge loans falling under the latter.

  • Regulated bridging loans – these types of bridging loans are for residential purposes only. This means that the borrower either lives in or is planning on living in them once purchased. A regulated bridge loan is overseen by the Financial Conduct Authority (FCA), giving the borrower extra protection and peace of mind against bad advice and mis-selling.
  • Unregulated bridging loans – these types of bridging loans are used for business finance and investments. As they are unregulated, they often offer extra flexibility and can be tailormade to suit the needs of the borrower.

If you are a limited company seeking to take a commercial bridge loan, then you shouldn’t be put off by the word unregulated.

Although bridging loans once had a bad reputation for being risky and expensive, today they are considered powerful sources of finance that enable businesses to do profitable deals that wouldn’t otherwise have been possible.

Are bridge rates higher for limited companies?

The rates you’ll receive if you trade as a limited company should be no different to those given to other types of commercial borrowers. Plus, at Bridging Options our brokers have access to large panel of specialist lenders, so are experts at finding the right rate for all types of businesses.

How long can a limited company take a bridge loan for?

Although bridging loans should be seen as a short-term solution, as a limited company it is possible to take a commercial bridging loan out for as little as 2 weeks or as long as 3 years (depending on the criteria of the financial agreement).

The great thing about a commercial bridge loan is that unlike a business loan from the bank; who will insist of sifting through realms of financial documentation before considering your application; providing you can show the lender assets in which to repay the bridge loan, funds can be made available within days.

This makes commercial bridging finance one of the fastest ways for limited companies to access capital.

When to use closed or open commercial bridge loans?

Most bridging loans have a definitive end date in which you need to settle your repayment. These are called closed bridge loans.  These types of commercial bridge loans carry less risk so tend to be offered with better rates of interest.

Closed commercial bridge loans are often used when businesses decide to move premises. If the new premises already have a fixed completion date, along with a fixed sale date for the current property, then a closed bridging loan makes the most sense.

An open bridge loan can be taken without a specific end date or exit strategy in place. This type of bridging loan is much more flexible and often comes with open ended repayment terms.  This type of commercial bridge loan is considered riskier, so it will come as no surprise to learn that interest rates tend to be higher.

Your limited company may choose to take an open commercial bridge loan if you need to relocate quickly but have yet to secure a buyer on your existing premises. Or, if you need to purchase new stock ready for a busy sales period but cannot pinpoint an exact date that you will have recouped your costs.

How to pay back a commercial bridging loan

Bridging loans offer limited companies a quick solution for raising funds until a permanent resolution is found. Therefore, they offer businesses a great way to maximise profit in the long run.

The rate of interest for a commercial bridge loan is normally charged in one of three ways:

  • Monthly – interest is paid each month and therefore not added to the balance of the loan.
  • Rolled-up – interest is accumulated each month and paid at the end of the term, when the original loan is repaid.
  • Retained – the cost of the interest owed is also borrowed as part of the original bridge loan. This total amount is then repaid at the end of the agreed term.

It is important to note, that lenders will charge penalties for bridging loans that are not repaid on time.

Your bridge loan choices are never limited with Bridging Options

Bridging Options specialise in providing finance specifically for limited companies. We can provide and support businesses with commercial bridge loans, advise them on how best to manage their cashflow and fund their business ventures.

For a free, no obligation telephone consultation, call us today or complete our online enquiry form and you could be well on your way to receiving your commercial bridging loan for your limited company today.

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