Commercial Bridging Loans

A commercial bridging loan is secured against property using either a first charge or a second charge. A first charge means the bridging lender has the primary legal claim on the property, which is the usual position when buying a new commercial premises or borrowing against a property with no existing mortgage. A second charge sits behind an existing loan on the property, and requires the first charge lender's consent, which can add time to the process.

Interest is charged in one of two ways. With serviced interest, you pay interest monthly, which keeps the balance owed lower but means you need proven cash flow to cover the payments. With rolled-up (retained) interest, interest is added to the loan and repaid in full when the loan ends, which eases cash flow during the term but increases the total amount owed at exit.

Whichever structure you use, lenders weigh one factor above all others: your exit strategy, meaning the realistic, evidenced plan for how the loan will be repaid. A sale that has exchanged, a mortgage offer already in place, or a confirmed source of funds all strengthen an application far more than the property's value alone. For the wider picture on how bridging finance works across residential and commercial property, read the full guide to residential and commercial bridging loans.

Pure commercial bridging, where the security property is used wholly for business purposes, sits outside the Financial Conduct Authority's consumer credit regulation. This gives lenders more flexibility in how they structure a deal, but it also means fewer of the consumer protections that apply to regulated lending.

The position changes for mixed-use or semi-commercial property. If part of the security has a genuine residential element, for example a shop with a flat above that you or a close family member will live in, the loan can tip into regulated territory. The trigger is occupation, not simply the presence of a residential unit: a flat that will be let out to a tenant does not usually change the loan's regulatory status, but one that the borrower or their family will occupy typically does.

If you are unsure which side of the line your property falls on, ask your lender or advisor to confirm the classification in writing before you proceed, since it affects the lender panel available to you and your legal protections. This is not a substitute for legal advice. For the full breakdown, see our guide to regulated vs unregulated bridging loans explained.

The type of property securing your loan changes more than just the paperwork. It determines which lenders will consider your application, how quickly a loan can be approved, the loan-to-value (LTV) you can typically access, and whether the loan is regulated. The table below sets out the key differences between commercial, residential and semi-commercial bridging loans.

This distinction matters beyond cost. Regulated loans come with statutory protections and a formal complaints route through the Financial Ombudsman Service, while unregulated commercial bridges rely more heavily on the contract terms agreed with the lender. Speed can also differ, since purely commercial deals can sometimes move faster because there is no requirement for the additional disclosure documents used in regulated lending.

Commercial bridging loans are used across a wide range of business situations where speed or short-term flexibility matters more than securing the lowest long-term cost.

• Buying commercial property: funding the purchase of an office, retail unit, warehouse or other business premises when a commercial mortgage would take too long to arrange.
• Auction purchases: auction contracts typically require completion within 28 days, a timeframe most commercial mortgages cannot meet, making a bridge the practical option.
• Refurbishment before letting or resale: funding light works to a commercial property to make it lettable or more valuable, then exiting via sale or refinance. See our guide to development and refurbishment bridging finance for heavier projects.
• Business acquisitions: funding the property element of a business purchase while longer-term finance is arranged separately.
• Raising capital against an unencumbered asset: unlocking equity from a commercial property you own outright, quickly and without committing to long-term debt.
• Breaking a chain on a commercial sale: covering the gap between completing a purchase and a linked sale falling through or being delayed.

A commercial bridging loan is made up of several cost components, not just one headline rate. The largest single cost is usually the interest itself, charged either monthly (serviced) or rolled up and repaid at the end of the term (retained). Because this varies significantly by lender, property type and loan-to-value, it is best confirmed with the specific lenders you are matched with rather than quoted as a single figure here. The other cost components are more consistent across the market and are set out below.

Worked example: say a limited company borrows £200,000 against a commercial unit at 65% loan-to-value over a 12-month term. On top of the loan itself, you might budget for an arrangement fee of around £2,000 to £4,000 (1% to 2%), a valuation fee of roughly £750 to £1,500, legal fees of around £1,500 to £3,000 combined, and an exit fee of £0 to £2,000 if the lender charges one. The interest cost, usually the single largest element, is added on top and depends on the lender and LTV agreed. This is an example only; your actual cost depends on the lender, property and loan-to-value, so use our bridging loan calculator for a personalised estimate, or see current bridging loan rates and fees.

Lender appetite and the loan-to-value on offer both shift depending on the type of commercial property securing your loan. The table below summarises how five common property types are typically treated.

Unusual or specialist property types, such as care homes or licensed premises, are still financeable but usually need a specialist lender and a more detailed valuation.

A commercial bridging loan is one of several ways to fund business property, and it isn't always the right one. The table below compares a commercial bridge against a commercial mortgage, a secured business loan and development finance, so you can see where each fits best.

A commercial bridging loan can solve a genuine funding gap, but it isn't without real risk, and you should weigh these honestly before committing.

• Cost: interest on a commercial bridge is materially higher than mainstream commercial lending, reflecting its short-term, asset-based nature. It is designed to be used briefly, not as an ongoing source of finance.
• Your property is the security: because the loan is secured against the property, it could be repossessed if repayments are not kept up or your exit strategy fails.
• Less room to recover from delay: short terms mean there is little slack if a sale falls through, a refinance is declined, or a letting takes longer to secure than planned.
• What happens if your exit fails: most lenders will first discuss an extension, which typically carries additional fees. If no workable extension can be agreed, the alternative is usually refinancing onto another bridge or, as a last resort, a forced sale of the property to recover the debt.

Acting early if your exit strategy looks at risk, rather than waiting until the term is about to end, gives you the best chance of agreeing a workable solution with your lender.

Consumer finance commentary, including guidance published by MoneySavingExpert, consistently cautions that bridging loans are an expensive way to borrow compared with mainstream lending, and should only be used where you have a clear, realistic exit strategy in place. That guidance reflects the same core message found throughout this page: a bridging loan can be a useful short-term tool, but the cost and the risk to your property mean it isn't right for every situation.

Rather than relying on a single quote, treat this as general published consumer guidance. If you're weighing up whether a commercial bridge is right for your circumstances, it's worth reading independent guidance such as MoneyHelper alongside speaking to an advisor.

Many commercial bridging pages online are written by a single lender selling its own product. Money Saving Advisors works differently: instead of one lender's terms, you get access to a panel of specialist commercial bridging lenders, so the loan is matched to your property and exit strategy rather than to what one lender happens to offer.

The process is straightforward. You explain your situation, an advisor reviews it against the panel of lenders, and you're talked through the options in plain English, including the costs and risks involved. There's no pressure to proceed at any stage, and no obligation to take a deal that doesn't suit your circumstances. If a commercial bridging loan isn't the right fit, your advisor will say so.