Business bridging loans exist because money rarely arrives when you need it. The spec home has sold but won’t settle for six weeks. The bank has approved your refinance in principle but wants another month. The perfect yard has come up, but your old one isn’t sold yet. In each case you know the money is coming. You just can’t wait for it. A bridging loan fills that gap, secured against property you already own, and gets repaid the moment the expected money lands.
What does a business bridging loan actually bridge?
Almost every bridging loan follows the same shape: money needed today, repaid from a known event tomorrow. For builders and tradies, the event is usually one of these:
- A property sale settling, such as a finished spec home or a duplex unit
- A bank refinance that’s approved but slow to settle
- A large contract payment or final claim on a finished job
- The sale of a business asset, like a yard, factory or equipment
- An insurance payout or similar funds that are confirmed but not yet paid
The stronger and more certain that event is, the simpler the bridging loan tends to be.
Open bridging versus closed bridging
These two terms come up a lot.
Closed bridging is when the exit is locked in with a firm date. For example, an unconditional contract of sale with a settlement date, or a signed bank approval with a settlement booked. Lenders are generally comfortable with these because the repayment is clear.
Open bridging is when the exit is expected but not yet certain. The property is listed but not sold, or the refinance application is still being assessed. It’s still very workable, but the lender will want more detail and a realistic timeframe.
For a fuller explanation, see our guide to bridging finance explained for builders.
Key facts
- Loan size: $20,000 to $5 million
- Security: existing property equity (home, investment, commercial property or land with equity)
- Speed: as little as 24 hours in some cases, typically a few days
- Term: typically 1 to 12 months, matched to the exit
- Paperwork: no financials or cash flow records for property secured loans
- Credit: bad credit considered
- Suits: builders and tradies waiting on a sale, settlement, refinance or large payment
Common bridging scenarios in construction
These are examples only, to show how business bridging loans tend to be used.
Example: buy the yard before you sell the yard. A landscaping and excavation business has outgrown its yard. A bigger site comes up at the right price, but the old yard will take months to sell. A bridging loan secured over both properties settles the new yard now. When the old yard sells, the bridging loan is repaid.
Example: sold but not settled. A small builder has just finished a duplex and sold one side. The buyer settles in eight weeks, but the builder wants to settle on the next block now before someone else grabs it. A bridging loan secured over the unsold side of the duplex, which the builder owns, covers the land purchase until the sale settles. See land purchase finance for builders for more on this.
Example: waiting on the bank. A builder has been approved in principle for a bank facility on a new small commercial project, but the bank’s formal approval keeps slipping. Trades are ready to start. A short bridging loan over the builder’s investment property gets the job moving, then the bank facility repays it on settlement.
How to make a bridging loan simple
The fastest bridging loans have three things in common:
- Clear security. Property with equity, with title details and any existing loan balances on hand.
- Documented exit. A contract of sale, a bank approval letter, or a signed contract showing the payment due.
- A realistic term. Enough time for the exit to happen, plus a buffer for delays.
If the exit is a sale that hasn’t happened yet, have an agent’s appraisal or a recent comparable sale ready. It helps the lender see the plan is sensible.
What happens if the exit is delayed?
It happens. Sales fall over, banks take longer, clients pay late. The key is to talk to your lending specialist as soon as you see a delay coming. The earlier it’s raised, the more options there usually are. That’s also why a buffer in the term matters. For more on planning your exit, read exit strategies for short term loans.
Mistakes to avoid with bridging finance
- Assuming the settlement date is fixed. Settlements move. Build in a buffer.
- Relying on a sale price that’s too hopeful. Base your plan on a realistic sale price, not your best case.
- Not lining up the refinance early. If your exit is a bank refinance, start that application at the same time as the bridging loan, not after.
- Using bridging for an open ended problem. If there’s no clear exit, a bridging loan isn’t the right tool. Talk to us about other options, including short term construction finance or a fast first mortgage.
What will it cost?
Every loan is priced on your circumstances, including the security, the loan size, the term and how certain the exit is. We find the sharpest rate available for your situation and show you the full picture before you commit.
Got a gap to bridge? Check your options in about 60 seconds. It won’t affect your credit score, and a lending specialist will call you back to work out the right structure.
