Bridging Loans

A commercial bridging loan is a short-term secured loan used to bridge a funding gap when purchasing, refinancing or raising capital against a commercial or part-commercial property. These loans typically run for 1 to 24 months and are designed for situations where speed matters more than long-term cost, such as auction purchases, chain breaks or business acquisitions where a commercial mortgage would take too long to arrange.

The 40% commercial use threshold

The key distinction between a commercial bridging loan and a residential one comes down to the property securing the loan. If 40% or more of the property's floor area or value is used for commercial purposes, most lenders classify the loan as a commercial bridge. This includes offices, retail units, warehouses, factories, care homes and mixed-use buildings such as parades of shops with flats above. Properties that fall below the 40% threshold are usually treated as residential or semi-commercial, which changes the lender panel, rates and regulatory treatment available to you.

Open vs closed commercial bridges

Commercial bridging loans fall into two categories. A closed bridge has a fixed repayment date, typically tied to a confirmed event such as a property sale that has exchanged or a commercial mortgage offer already in place. Lenders view closed bridges as lower risk, so rates tend to be more competitive. An open bridge has no fixed repayment date, though most lenders set a maximum term of 12 to 18 months. Open bridges suit borrowers who have a clear exit route but cannot confirm the exact date, for example when selling a commercial property that has not yet found a buyer.

Unlike most residential bridging loans, commercial bridges are typically unregulated, which gives lenders greater flexibility in how they structure deals but also means fewer consumer protections apply. For a full breakdown of how bridging finance works across all property types, read our full bridging loan guide.

Commercial bridging loans are secured against property, and the type of charge determines your options and the cost of borrowing.

First charge vs second charge security

A first charge loan means the bridging lender holds the primary claim on the security property. This is the most common arrangement when buying a new commercial property or borrowing against an asset with no existing mortgage. First charge commercial bridges typically offer the lowest rates and highest loan-to-value (LTV) ratios, because the lender's position is better protected if the loan needs to be recovered.

A second charge loan sits behind an existing mortgage or loan on the property. These are useful when you want to release equity from a commercial property that already carries a first charge, but rates are higher and maximum LTVs are lower because the lender takes on more risk. The first charge lender must also consent to the second charge being placed, which can add time to the process.

How interest works

Most commercial bridging loans use rolled-up interest, where the monthly interest is added to the loan balance and repaid in full when you exit. You make no monthly payments during the term, which helps with cash flow on projects where income has not yet started. Some lenders offer serviced interest, where you pay interest monthly. This reduces the total cost of the loan but requires you to demonstrate the cash flow to cover those payments throughout the term.

Why the exit strategy matters most

The exit strategy is the single most important factor in any commercial bridging loan application. Lenders need to see a clear, credible plan for repaying the loan in full within the agreed term. Common exit strategies include selling the property, refinancing onto a commercial mortgage, or using proceeds from a separate business transaction. Without a realistic exit, most lenders will decline the application regardless of the property value or your financial position.

Is a commercial bridging loan regulated?

Pure commercial bridging, where the security property is used entirely for business purposes, is unregulated. However, if the property includes any residential element where the borrower or a close family member lives, the loan can fall into regulated territory. Semi-commercial properties such as a shop with a flat above where the borrower resides sit in this grey area. Getting the classification right matters because it affects the lender panel available to you, the consumer protections in place, and the cost of the loan. For more detail on when a bridge becomes regulated, see our guide to regulated bridging loans explained.

Commercial bridging loan rates are influenced by the loan-to-value ratio, the property type, the borrower's experience and credit profile, and whether the loan is a first or second charge. Rates have remained relatively stable through the first half of 2026, with most commercial bridging lenders quoting between 0.55% and 1.25% per month for standard first charge deals. Second charge rates are typically 0.2% to 0.4% per month higher.

The table below sets out typical rate ranges and fees for commercial bridging loans in the current market. All figures are indicative and will vary by lender, property type and individual circumstances.

Worked cost example

To illustrate the total cost of a commercial bridging loan, here is a worked example based on a typical deal.

Scenario: a limited company borrows £500,000 at 65% LTV to purchase a commercial unit, with a 9-month term and an exit strategy of refinancing onto a commercial mortgage.

• Gross loan: £500,000
• Monthly rate: 0.85% (rolled up)
• Monthly interest: £4,250
• Total interest over 9 months: £38,250
• Arrangement fee (2%): £10,000
• Valuation fee: £1,200
• Lender legal fees: £1,500
• Borrower legal fees: £1,200
• Exit fee (1%): £5,000
• Total cost of the bridge: £57,150

This means the effective total cost of borrowing over 9 months is approximately 11.4% of the loan amount. While this is significantly more expensive than a commercial mortgage over the same period, the speed and flexibility of a bridge may justify the premium when time-critical deals are involved.

For a personalised estimate of your costs, use our bridging loan calculator. To compare the latest rates across lenders, see our guide to bridging loan rates.

How do commercial rates compare to residential and semi-commercial?

Commercial bridging loans typically carry a small rate premium over residential bridges, reflecting the higher risk profile of commercial property. Semi-commercial deals fall somewhere between the two. The table below summarises the key differences. If you are considering a residential bridge, our residential bridging loans guide covers the specifics.

Commercial bridging loans are used across a wide range of business scenarios where speed of funding, short-term flexibility or both are more important than securing the cheapest long-term rate. Below are the most common use cases.

• Buying commercial property at auction: auction purchases typically require completion within 28 days, making a bridging loan the only practical option when a commercial mortgage cannot be arranged in time.
• Breaking a property chain: if you need to buy a new commercial premises before your existing one has sold, a bridge covers the gap between purchase and sale.
• Business acquisitions: when acquiring a business that includes commercial property, bridging finance can fund the property element while longer-term funding is arranged.
• Cash-flow or tax bill funding: borrowing against an unencumbered commercial asset to cover a short-term cash shortfall, a VAT bill or a corporation tax payment, with the loan repaid once business income catches up.
• Refurbishment before sale or letting: funding light refurbishment works on a commercial property to increase its value or make it lettable, then exiting via sale or refinance onto a commercial mortgage.
• Raising capital against an unencumbered asset: if you own a commercial property outright, a bridge lets you unlock equity quickly without committing to long-term debt.

By property type

The property type securing the loan affects rates, LTV limits and lender appetite. Here is how different commercial property categories are typically treated by bridging lenders.

• Retail: high street shops, shopping parade units, convenience stores. Standard LTVs apply, but lenders may look more carefully at tenant quality and location.
• Office: single offices, serviced office blocks, business parks. Generally straightforward for lenders if the location has established demand.
• Industrial and warehouse: factories, distribution centres, storage units. Often viewed favourably due to strong occupier demand for logistics and warehousing space.
• Semi-commercial: mixed-use properties such as shops with flats above. Classification as commercial or residential depends on the 40% threshold, and may affect whether the loan is regulated.
• Land and development sites: raw land or sites with planning permission. Higher risk for lenders, so expect lower LTVs and higher rates. For dedicated development funding, see our guide to commercial property development finance.

Commercial bridging lenders take a more flexible approach to eligibility than high street banks. Because the loan is secured primarily against the property and repaid through a defined exit strategy, the borrower's personal income or credit score carries less weight than it would on a standard mortgage application.

Borrower types

Commercial bridging loans are available to a range of borrower structures, not just individuals. The most common include:

• Limited companies: the most common borrower type for commercial bridges. The company takes on the loan, with personal guarantees from directors usually required.
• Limited liability partnerships (LLPs): treated similarly to limited companies by most bridging lenders.
• Sole traders: can borrow in their own name, though lenders may require the property to be held personally.
• Special purpose vehicles (SPVs): commonly used by property investors and developers. Many commercial bridging lenders are comfortable lending to newly formed SPVs provided the directors have relevant experience.
• Foreign nationals and offshore companies: some specialist lenders will consider applications from non-UK residents or entities registered overseas, though the lender panel narrows and rates are typically higher.

Credit history

Commercial bridging is a form of asset-based lending. This means that while lenders will review your credit history, adverse credit does not automatically rule you out. Defaults, county court judgments, missed payments and even previous insolvency may be accepted by specialist lenders, provided the security property is strong and the exit strategy is credible. Expect higher rates and lower LTVs if your credit file has significant issues.

Exit strategy requirements

Every lender will want to see a documented exit strategy before approving a commercial bridge. The exit must be realistic and achievable within the loan term. Selling the property, refinancing onto a commercial mortgage and using business sale proceeds are the three most commonly accepted routes. Lenders will often ask for supporting evidence, such as a mortgage agreement in principle, a sale memorandum or valuation evidence showing the property can achieve the required sale price.

Security requirements

The security property must be located in England, Wales, Scotland or Northern Ireland for most UK lenders. It must have a clear legal title and be independently valued before completion. Some lenders accept second charge security, but first charge positions are preferred and attract better terms.

Applying for a commercial bridging loan follows a structured process, though the speed of each stage depends on the complexity of the deal, the lender chosen and how quickly you can provide the required documentation.

Step-by-step process

• Initial enquiry: you submit details of the property, the loan amount needed, the purpose of the loan and your planned exit strategy. A broker or lender can typically provide an indicative terms sheet within 24 to 48 hours.
• Valuation: the lender instructs an independent RICS surveyor to value the security property. This confirms the property's open market value and any special assumptions, such as post-refurbishment value if relevant. Valuation fees are paid upfront by the borrower.
• Underwriting: the lender reviews the valuation, your application details, the exit strategy and any supporting documents. For straightforward deals this can take a few days. More complex structures may take longer.
• Legal work: both the lender's solicitor and your own solicitor handle the legal documentation, title checks, searches and charge registration. Using a solicitor experienced in bridging finance can significantly reduce delays at this stage.
• Completion and drawdown: once legal work is finalised and all conditions are satisfied, the loan funds are released. On a straightforward first charge deal, the full process from application to funds arriving can take as little as 5 to 10 working days.

Documents you will typically need

• Proof of identity and address for all directors or borrowers
• Company accounts or management accounts for the borrowing entity
• Details of the security property, including address and tenure
• Evidence of your exit strategy, such as a mortgage agreement in principle, estate agent valuation or heads of terms on a sale
• Source of deposit or equity contribution
• Details of any existing charges on the property

Typical timeline

Most commercial bridging loans complete within 2 to 4 weeks. Simple deals with clean titles and straightforward security can complete faster, sometimes within 5 to 7 working days. Complex deals involving multiple securities, second charges or unusual property types may take 4 to 6 weeks. Working with a broker who has established relationships with commercial bridging lenders can help identify the fastest route for your particular situation.

Commercial bridging loans are one of several secured finance options available to UK businesses. Choosing between them depends on how quickly you need the funds, how long you need to borrow for, and whether the property or project fits the criteria for longer-term lending. The table below compares the four most common options side by side.

Risks to consider before committing

Commercial bridging loans carry specific risks that you should weigh carefully before proceeding.

• Exit strategy failure: if your planned exit falls through, for example a property sale collapses or a commercial mortgage application is declined, you may be unable to repay the loan on time. This can lead to penalty interest, additional fees and, in the worst case, the lender taking possession of the security property.
• Cost of extending: if you cannot exit within the original term, extending an open bridge typically incurs additional arrangement fees and may carry a higher monthly rate. Rolled-up interest also means the total debt continues to grow each month the loan remains outstanding.
• Unregulated market due diligence: because most commercial bridging loans are unregulated, you do not have the same protections as you would with a regulated mortgage. It is essential to use a solicitor experienced in bridging finance, read all loan documentation carefully and understand the full cost of the loan including all fees before signing.
• Valuation risk: if the security property is valued at a lower figure than expected, the lender may reduce the loan amount or require additional security, which can delay or prevent the transaction from completing.

For businesses that need longer-term property finance rather than a short-term bridge, a commercial mortgage will almost always be cheaper over the full term. If you are refinancing out of a bridge onto a longer-term product, comparing mortgage options early in the process helps ensure you have a viable exit route in place before your bridging term expires.

Your property may be repossessed if you do not keep up repayments on a loan secured against it. Commercial bridging loans are typically unregulated and may not be covered by the Financial Services Compensation Scheme. Always seek independent legal and financial advice before committing to a secured loan.