Best Commercial Finance

In order to discuss the acquisition of a commercial short term bridging loan, we first need to define exactly what this form of finance is, there are two general forms that a short term bridging loan can take, and both of these are detailed below.

• Closed Bridge – This type of short term bridging loan is used to obtain finance to purchase a new property before the sale of an existing property has been completed. A closed bridge is only applicable to a borrower who has already exchanged contracts on the sale of their existing property. This is the easier of the two types of short term bridging loan to apply for successfully, lenders see this as a particularly low risk form of finance, due to the fact that a property deal will seldom go sour once the contracts have been signed and exchanged.

• Open Bridge – This is a far riskier form of short term bridging loan, and is used to finance the purchase of a new property even if the existing property has yet to be sold, or even placed upon the market. Interest rates for this type of short term bridging loan can be somewhat higher than other forms of borrowing, specifically due to the increased risk of lending. If you need to apply for an open bridge, you will need to supply some additional documentation which will include proof that you are actively trying to sell your existing property, along with a clearly defined exit strategy to be executed should the loan run full term before the existing property is sold. Commercial borrowers will also need to submit a fully detailed business plan which demonstrates the company’s capability to meet the loan repayments, along with a set of full audited company accounts.

These two types of short term bridging loan share a similar application process, you should approach multiple lenders and review a selection of products in order to find the best short term bridging loan for your needs. Often you will find that the acceptance criteria for an application will differ significantly between lenders, you will need to understand these criteria in order to increase the likelihood of your application achieving a positive outcome.

It is highly recommended that you use the services of a professional commercial finance broker from the outset; your broker will have the experience and knowledge necessary to communicate with lenders on their own terms. Additionally, a good broker will be able to help you with the production of the accompany documentation, such as the business plan and exit strategy proposal. Your broker will have access to a far greater range of short term bridging loan products, and will be in a far better position to find the optimum product for your specific situation. All in all, the services of a commercial finance broker should be seen as a necessity when applying for any form of commercial finance, for a short term bridging loan this is doubly true.