Obtaining bridging finance quickly depends in part on correctly filled out loan applications in which all criteria are fulfilled.
With over 100 lenders in the UK, we thought it worth writing about what criteria is requested, along with a breakdown of what some of the terminology means.
Each lender will display the levels of loan they can offer. In commercial bridging this is generally between £500,000 and up, though many of the lenders actually start at £750,000.
The loan ‘term’ refers to how long you are borrowing the money for. Typically, these will lie between 1 and 18 months, though in some circumstances these can be extended to 36 months or more.
NB, this differs for the regulated non-commercial sector where the FCA imposes a mandatory 12 month limit.
Bridging Loan Security
Security is one of the key factors in being able to obtain bridging and each lender will have slightly different criteria as to what they deem acceptable.
Assets eligible for security may include:
- Property -Houses, flats, mixed-use, care homes, offices, shops, hotels, restaurants etc
- Land – including car parks, farmland, development land, barn etc
- Assets such as jewellery, antiques, vehicles, trade assets, etc.
What are ‘Acceptable Borrowers’?
Most loans specify whom they consider to be an acceptable borrower. These are typically adults of at least 18 years old. In addition borrowers can be:
- Private individuals
- Limited Companies
- Pension Funds
- Offshore Companies
Credit history is significantly less important with bridging than most types of finance since the lender is primarily concerned with security. As long as this criteria is fulfilled there are a number of lenders who will be quite happy to lend money even to a company with poor credit history.
If your company has experienced adverse credit but you are still needing a reliable bridging loan, do contact us and we can introduce you to those lenders who will work for you.
Proof of Income
Proof of income, almost known as income verification, is standard practice for all commercial loans.
Proof of income may come in the form of tax returns, audited accounts, or bank statements.
The exit strategy is the plan you have to pay the loan off. At the point of obtaining your bridging loan, lenders will always wish to understand what needs to happen for you to exit the loan. This will allow them to assess the level of associated risk.
Typical exit strategies include:
- Selling an Existing Property
- Business Merger
- Selling a Business or Shares in It
- Cashing in Investments
- Proceeds of a Debt Repayment