Bridging Loans for Limited Companies

Expert guide to bridging finance for UK limited companies.

Understand your options, requirements and how to secure funding fast. Get started today.

Bridging Loans for Limited Companies

Expert guide to bridging finance for UK limited companies.

Understand your options, requirements and how to secure funding fast. Get started today.

Running a business means staying ready to grab opportunities when they appear.

Whether it’s a prime piece of commercial property on the market, essential equipment at auction, or a chance to expand your operations – these moments often demand quick access to funds.

But standard business loans and mortgages can take months to arrange, and by then, that golden opportunity might be gone.

That’s where bridging loans come in.

As a limited company owner, you’ve got options for securing short-term finance that can help you move fast when it matters most. These loans can provide the money you need in a matter of days or weeks, rather than months, giving you the power to act decisively when time is of the essence.

In this guide, we’ll walk you through everything you need to know about bridging finance for limited companies.

Understanding Bridging Finance for Companies

When your business needs quick access to funds, bridging finance offers a convenient and agile solution.

These are short-term loans secured against property or assets, designed to help your company seize time-sensitive opportunities or handle temporary cash flow gaps.

It gives your limited company the funds you need right now, while you’re arranging longer-term finance or waiting for other funds to become available.

The term ‘bridging’ comes from exactly this concept – the loan bridges the gap between needing money and having access to it through other means.

Unlike traditional business loans or commercial mortgages, bridging finance focuses more on your company’s assets and exit strategy than its trading history or credit score.

This makes them particularly useful for newer companies or those facing time-pressured situations. You won’t need years of accounts or complex cash flow forecasts – instead, lenders want to see what property or assets you’ll use as security and how you plan to repay the loan.

These loans stand out from other types of business finance in several ways.

While a standard commercial loan will take a few months to arrange, bridging finance can be set up in days. The application process cuts through much of the red tape you’d face with traditional lending.

Companies turn to bridging finance in various situations.

You might spot an unmissable property deal that needs quick completion, or perhaps you’re buying at auction where you need funds within 28 days. Maybe you’re waiting for a property sale to complete but need to move forward with another purchase in the meantime.

Some businesses use these loans to fund quick renovations before refinancing onto a standard commercial mortgage.

One key advantage is flexibility in how you use the funds. Unlike mortgages or asset finance that tie you to specific purchases, bridging loans offer more freedom.

You could use the money to:

  • Buy a property before selling another one
  • Complete urgent renovations to increase a property’s value
  • Purchase stock or equipment at auction
  • Fund a business expansion while waiting for long-term finance
  • Meet unexpected tax bills or other urgent payments

The speed and flexibility of bridging finance come with higher interest rates but since these loans are short-term – usually between a few months and a couple of years – many companies find this a worthwhile trade-off for the ability to move quickly on opportunities.

Remember that while bridging loans can be incredibly useful, they’re not suitable for every situation.

They work best when you have a clear timeline for repaying the loan, whether through selling assets, refinancing to a longer-term loan, or using incoming funds from another source.

SPV vs Trading Limited Companies

If you’re looking into bridging finance for your company, you’ll need to understand whether you’re able to use a trading company or an SPV.

Let’s clear up any confusion about these two structures and how they affect your borrowing options.

An SPV (Special Purpose Vehicle) is simply a limited company set up specifically to hold and manage property investments. These are very popular with property investors and buy to let landlords.

When you register an SPV at Companies House, you’ll use specific SIC codes that show it’s purely for property – usually codes 68100 for buying and selling property, or 68209 for letting property. This single focus makes things straightforward for both you and potential lenders.

Trading companies, on the other hand, carry out broader business activities.

They might sell products, offer services, or handle various operations beyond property investment. Your local shop, manufacturing business, or service company would all be examples of trading companies.

Creating an SPV for your property investments brings several advantages when seeking bridging finance.

Lenders often prefer lending to SPVs because they’re easier to assess – all income and expenses relate directly to property activities. This clarity can lead to smoother applications and sometimes better lending terms.

SPVs can also help you keep your property investments separate from other business activities.

This separation makes it easier to:

  • Track property-related income and expenses
  • Manage tax planning more effectively
  • Ring-fence property assets from trading risks
  • Scale up your property portfolio more efficiently

Lenders take different approaches to SPVs and trading companies.

With an SPV, they’ll focus mainly on the property being used as security and your exit strategy. They know exactly what they’re dealing with – a company that exists solely for property investment.

When considering a trading company, lenders will need to look at wider business activities, trading history, affordability, and how the property investment fits into your overall business strategy.

This doesn’t mean they won’t lend to trading companies – many do – but the assessment process can be more detailed.

Some business owners choose to have both structures: a trading company for their main business and an SPV for property investments.

This approach can work well if you want to keep your property activities separate from your day-to-day business operations.

Your choice between an SPV and trading company structure depends on your long-term plans.

If you’re focusing purely on property investment, an SPV often makes more sense. But if you’re buying a property for your existing business – like new office space or a warehouse – using your trading company might be more appropriate.

Keep in mind that both structures will need to provide personal guarantees for bridging loans.

These guarantees mean company directors remain personally responsible for the loan, regardless of which company structure you choose.

Let’s talk bridging loans!

Book your free consultation today and let’s discuss how we can help you achieve your property goals.

Key Benefits for Limited Companies

When your limited company needs finance, bridging loans offer unique advantages that set them apart from standard business lending.

Let’s explore how these loans could benefit your company.

Speed stands out as one of the biggest plus points.

Bridging finance can put money in your company’s account within days or weeks. This quick access to funds means you won’t miss out on time-sensitive deals or urgent business opportunities.

You’ll find bridging loans offer much more flexibility.

Unlike mortgages that must be used for property purchases or asset finance tied to specific equipment, bridging loans give you more freedom in how you use the money.

Your company could use the funds to:

  • Buy property before selling existing assets
  • Renovate buildings to increase their value
  • Purchase stock at advantageous prices
  • Cover unexpected business costs
  • Fund short-term expansion plans

Property purchases become much more straightforward with bridging finance.

If your company spots an undervalued property or wins an auction bid, you won’t need to wait for lengthy mortgage approvals. This speed puts you in a stronger position when negotiating property deals – sellers often prefer buyers who can move quickly.

Business expansion opportunities become easier to grasp too.

Perhaps you’ve found perfect premises for your growing company, but they need work before a traditional lender will consider them. A bridging loan could help you buy and renovate the property, creating an asset that’s suitable for long-term commercial mortgage refinancing.

Many companies use bridging loans as part of a wider financial strategy.

For example, you might use a bridge loan to buy and refurbish a property quickly, then refinance onto a commercial mortgage once the work’s complete. This approach can help you maximise property values and secure better long-term lending rates.

Remember though, bridging loans work best when you have a clear plan for paying them back. Whether you’re planning to sell assets, refinance to a longer-term loan, or use incoming funds from another source, your exit strategy needs to be solid and realistic.

Eligibility and Requirements

Getting a bridging loan for your company isn’t as complex as you might think.

It’s important to remember that the asset needs to be in the company name, as well as the borrowing.

Let’s look at what you’ll need to put together for a successful application.

Company Documentation

Your company’s paperwork needs to be in good order before approaching lenders. At minimum, you’ll need your certificate of incorporation and up-to-date company accounts. If you’ve just set up your SPV or limited company, don’t worry – many lenders will work with newly formed companies.

Each director owning more than 25% of the company will need to provide:

  • Proof of ID (passport or driving licence)
  • Proof of address (recent utility bill or bank statement)
  • Bank statements showing company transactions

For your company, make sure you have:

  • Recent bank statements in your company name
  • Any existing lease agreements or rental contracts
  • Evidence of your planned exit strategy

If you’re using an SPV, check that your SIC codes are registered correctly at Companies House. These codes should reflect property investment activities – getting this right makes a big difference to how lenders view your application.

Security and Assets

Bridging lenders will want to secure their loan against property or assets.

Most commonly, this means:

  • Commercial property
  • Residential investment property
  • Mixed-use buildings
  • Land (with or without planning permission)

The property you’re offering as security needs to be marketable and in reasonable condition. Lenders will send a surveyor to value it and check its condition.

While they’ll consider most property types, some are easier to secure loans against than others.

You might also be able to use other assets as additional security.

Some lenders accept:

  • Investment portfolios
  • Other properties in your portfolio
  • Equipment or machinery
  • Company assets

Most lenders will ask directors to provide personal guarantees. This means you’re personally responsible for the loan if your company can’t repay it.

While this might seem daunting, it’s standard practice in business lending.

The amount you can borrow depends mainly on the value of your security. Most lenders offer up to 75% of the property’s value, though some go higher with additional security. For commercial property, expect slightly lower loan-to-value ratios around 65-70%.

If you’re buying property at auction or need funds very quickly, let your broker know upfront. They can focus on lenders who specialise in fast completions and have experience with auction purchases.

Your exit strategy – how you plan to repay the loan – needs to be realistic and well-documented.

Whether you’re planning to sell property, refinance to a commercial mortgage, or use business profits, be ready to show evidence that your plan is achievable.

Be upfront about any potential issues with your application. Experienced brokers have seen most situations before and can often find solutions to problems that might seem like deal-breakers at first glance.

Exit Strategies

Your exit strategy might sound like business jargon, but it’s simply your detailed plan for paying back the bridging loan.

Getting this right is key to securing your loan and keeping your costs down.

Think of your exit strategy as a roadmap showing lenders how you’ll move from short-term bridging finance to paying off the loan. The clearer and more realistic your plan, the more confident lenders will feel about working with your company.

Most companies choose one of three main routes to exit their bridging loan.

Let’s look at how each one works.

Refinancing to a commercial mortgage is a popular choice, especially if you’re using the bridging loan to buy or improve property.

Once you’ve completed any renovations or established a rental income, you can switch to a longer-term mortgage with monthly payments. Make sure you speak with mortgage lenders early on – get an agreement in principle if possible. This shows bridging lenders you’ve thought ahead.

Selling property or assets offers another clear route.

If you’re developing property to sell, show lenders evidence of local market values and buyer demand. Include a backup plan too – perhaps keeping the property and refinancing if the sale takes longer than expected. Lenders like to see you’ve considered different scenarios.

Some companies plan to repay their bridging loan using income from other sources.

This might be business profits, money from another property sale, or funds from investors. Whatever source you’re counting on, you’ll need solid evidence to back up your plans.

Your exit strategy needs careful planning.

Consider:

  • How long you’ll need before your exit plan comes together
  • What could go wrong and how you’ll handle it
  • Whether you need any permissions or licenses
  • Market conditions that might affect your plans
  • Backup options if things take longer than expected

Lenders understand that plans sometimes need to change. If you hit a snag with your exit strategy, talk to your broker straight away. They can often negotiate with lenders to extend your loan or suggest alternative options.

Keep your strategy realistic and avoid over-promising on timelines. It’s better to plan for a slightly longer term and exit early than to rush and need extensions.

Extensions mean extra costs, so getting your timing right from the start saves money.

Read more: How Do You Pay Back a Bridging Loan?

Working with a Broker

Finding the right bridging loan for your company becomes much simpler with expert help.

A good broker does far more than just find you a loan – they’re your guide through the whole process, helping you avoid common pitfalls and secure better terms.

Brokers bring valuable market knowledge to the table.

They work with bridging lenders every day, so they know which ones offer the best terms for different situations. When you work with a broker, you’ll get access to a much wider range of options, including lenders who only work through brokers and keep their best rates off the open market.

Cost savings can be significant.

While brokers charge fees for their service, they often save you money overall by negotiating better rates and terms. Your broker should be happy to explain things clearly and answer all your questions.

They’re there to make the process easier, not more complicated. If something’s not clear, ask them to explain it another way.

Real-World Examples

Let’s look at how other companies have used bridging finance successfully.

Fast-Moving Property Deal

A manufacturing company spotted the perfect premises next door to their existing site. The owner wanted a quick sale and had other interested buyers. With just £200,000 in readily available funds against a £800,000 purchase price, they needed fast finance.

Using a bridging loan secured against both their current and new premises, they completed the purchase within three weeks. Six months later, they refinanced onto a commercial mortgage, giving them time to arrange the best long-term rates.

Smart Business Expansion

An online retailer needed larger warehouse space before their busy season. They found an ideal but run-down unit at a great price. Traditional lenders wouldn’t consider it until renovations were complete.

Through their SPV, they used a commercial bridging loan to buy and renovate the property. Within four months, they had transformed it into a modern distribution centre. They then refinanced onto a commercial mortgage at a much higher property value, actually reducing their long-term borrowing needs.

Managing Short-Term Cash Flow

A property development company had several projects nearing completion but faced an unexpected tax bill. Rather than selling properties at reduced prices for quick sales, they used a bridging loan secured against one of their completed developments.

This gave them time to achieve full market value on their sales. They repaid the bridge within three months using the proceeds from just one property sale, protecting their profit margins across the whole portfolio.

In Summary

Bridging loans offer limited companies a quick and flexible way to seize opportunities and solve short-term funding challenges.

Whether you’re buying property, expanding your business, or managing cash flow, they can provide the quick access to funds you need.

Success with bridging finance comes down to three key factors:

  • Having a solid exit strategy
  • Working with experienced professionals
  • Understanding the costs and commitments involved

If you’re considering a bridging loan for your company, start by:

  • Clarifying exactly what you need the funds for
  • Gathering your company documentation
  • Speaking with a broker about your options

Remember, every company’s situation is unique. What works for one business might not suit another. Take time to understand your options and get professional advice before making decisions.

Ready to explore bridging finance for your company?

Call us on 020 3488 5706 to get started.

FAQ

Most bridging loans complete within 2-4 weeks. With all documentation ready and a straightforward case, you could receive funds in as little as 7-10 days.

Yes, trading companies can access bridging finance. While some lenders prefer SPVs, many will lend to trading companies with a clear business case.

Lenders require property as security. This can be commercial, residential investment, or mixed-use property. They’ll also usually ask for personal guarantees from directors.

Read more: What is a Bridging Loan Secured Against?

Yes, many companies use bridging loans for light to medium refurbishment. For heavy development, specific development finance might be more suitable.

Usually, yes. Most lenders require personal guarantees from directors holding more than 25% of shares.

Most business bridging loans are unregulated. Regulated loans only apply when the security is a persons primary residence.

Setting up an SPV is straightforward.

Initially you should seek advice from your accountant.

First, register your company with Companies House – this costs £50 for standard registration. Choose property-related SIC codes (68100 for buying and selling property, or 68209 for letting). You’ll need at least one director and shareholder. Open a business bank account once your company is registered.

The main SIC codes used for property investment companies are:

68100 – Buying and selling your own real estate 68209 – Other letting and operating of your own or leased real estate 68320 – Managing real estate on a fee or contract basis

For an SPV set up purely for property investment or buy-to-let, you’ll typically use 68100 and 68209. You can choose up to four SIC codes when registering your company.

These codes tell Companies House and others what your business does. For property SPVs, using the right codes shows lenders you’re focused solely on property investment, which can help with loan applications.

You’ll need to provide these codes when:

  • First registering your company
  • Filing your confirmation statement each year
  • Opening business bank accounts
  • Applying for finance

You can change your SIC codes later if your business activities change. This is done through your annual confirmation statement at Companies House.

For most property investors, sticking to the standard property investment codes (68100 and 68209) keeps things simple and clear for lenders and other parties you’ll deal with.

Yes, an SPV can use money held within the company as a deposit for property purchases.

This might come from:

  • Retained profits from previous property deals
  • Rental income built up in the company
  • Director loans paid into the company
  • Investment from shareholders
  • Money raised from selling other properties owned by the SPV

Lenders will want to see clear evidence of where the deposit money came from. You’ll need to show:

  • Bank statements proving the money is in your SPV’s account
  • Documentation showing the source of funds
  • A clear trail of how the money came into the company

Many property investors build up deposits in their SPV through:

  • Saving rental income instead of taking it as dividends
  • Putting personal money in as a director’s loan
  • Reinvesting profits from previous property sales

If you’re using a director’s loan as the deposit, keep clear records of money paid into the company. This makes it easier to take the money back out later and helps with lender applications.

Some lenders prefer to see money that’s been in the SPV’s account for at least three months. Let your broker know early on where your deposit is coming from so they can find lenders who are comfortable with your situation.

A VAT bridging loan helps businesses pay the VAT due on commercial property purchases upfront.

When you buy a commercial property, you often need to pay 20% VAT on top of the purchase price. These loans cover that VAT amount until you can reclaim it from HMRC.

Still have more questions?

Just give us a call on 020 3488 5706 to speak with an expert.
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