A Guide to Commercial Bridging Loans

What is a commercial bridging loan?

A commercial bridging loan is a short-term financing option designed to “bridge” the gap between a current need for immediate funding and the future availability of long-term financing. Typically secured against commercial property, these loans provide quick access to capital for businesses or investors looking to seize opportunities or manage short-term cash flow challenges.

How Commercial Bridging Loans Work

Loan Amount and Term:

  • Loan amounts can vary significantly depending on the lender and the value of the collateral. Terms are generally short, ranging from a few months to a year, although some lenders may offer terms up to 24 months.

Interest Rates and Fees:

  • Interest rates are typically higher than standard commercial loans due to their short-term nature and higher risk. Rates can be charged monthly, ranging from 0.5% to 1.5% per month. Additionally, arrangement fees, exit fees, and other charges may apply.


  • These loans are usually secured against commercial property or other substantial assets. Lenders assess the value of the collateral to determine the loan-to-value (LTV) ratio, commonly up to 75%.


  • Repayment structures vary; some loans may require monthly interest payments with the principal repaid at the end, while others might roll up interest to be paid in full with the principal at the loan’s conclusion.

Uses of Commercial Bridging Loans

Property Purchase:

  • Investors or businesses can use bridging loans to quickly purchase property, especially when the traditional mortgage process is too slow. This is particularly useful in competitive markets or auction scenarios.

Refurbishment and Development:

  • These loans can finance property renovations or developments that will increase the property’s value, making it easier to secure long-term financing or sell for a profit.

Business Cash Flow:

  • Companies might use bridging loans to cover temporary cash flow issues, ensuring operational continuity until other financing is arranged or revenues increase.

Auction Purchases:

  • The speed and certainty of bridging finance make it ideal for buying properties at auction, where completion deadlines are tight.

Debt Consolidation:

  • Businesses may consolidate expensive short-term debts into one bridging loan, reducing overall interest costs and simplifying financial management.

Costs Associated with Commercial Bridging Loans

Interest Rates:

  • As mentioned, monthly interest rates typically range from 0.5% to 1.5%. The annual percentage rate (APR) can therefore be significantly higher than traditional loans.

Arrangement Fees:

  • These are upfront fees paid to the lender for setting up the loan, usually 1-2% of the loan amount.

Exit Fees:

  • Some lenders charge a fee when the loan is repaid, either as a fixed amount or a percentage of the loan.

Valuation Fees:

  • Lenders require a valuation of the property being used as collateral, which the borrower usually pays for.
  1. Legal Fees:
  • Both the lender’s and borrower’s legal costs need to be covered, which can add to the overall cost.

Applying for a Commercial Bridging Loan at Donkey Finance

Donkey Finance is a financial services provider specialising in short-term lending solutions, including commercial bridging loans. They offer competitive rates, flexible terms, and a streamlined application process designed to provide quick access to funds.

The Application Process

  1. Initial Inquiry:
  • Start by filling out our initial inquiry form with basic details about the loan amount, term, and the property being used as security.
  1. Consultation:
  • A representative from Donkey Finance will contact you to discuss your requirements in detail, including the purpose of the loan, repayment strategy, and any other pertinent details.
  1. Documentation Submission:

You will need to provide documentation, including:

  • Proof of identity and address
  • Financial statements and business plans (if applicable)
  • Details of the property to be used as security (title deeds, existing mortgage statements, etc.)
  • Any other documents requested by the lender
  1. Valuation:
  • Donkey Finance will arrange for a valuation of the property. The borrower usually covers the cost of this valuation.
  1. Offer and Agreement:
  • Once the valuation and due diligence are complete, Donkey Finance will provide a formal loan offer. This will include all terms and conditions, interest rates, fees, and repayment schedules.
  1. Legal Process:
  • The legal teams for both the lender and the borrower will work to finalise the loan agreement. This includes ensuring all legal aspects of the property and the loan are clear and agreed upon.
  1. Funds Disbursement:
  • Upon signing the agreement and completing all necessary legal work, Donkey Finance will disburse the funds, typically within a few days.

Tips for Successfully Securing a Commercial Bridging Loan

  1. Prepare thorough documentation:
  • Ensure all required documents are ready and accurate to expedite the process.
  1. A Clear Repayment Plan:
  • Have a solid plan for repaying the loan, whether through long-term financing, property sales, or increased business revenue.
  1. Understand the costs:
  • Be aware of all associated costs, including interest rates, fees, and legal expenses, to avoid any surprises.
  1. Choose the right lender:
  • Research and compare commercial bridge loan direct lenders to find the best terms and rates. Look for lenders with good reputations and transparent practices.
  1. Professional Advice:
  • Consider seeking advice from financial advisors or brokers who specialise in commercial bridging loans to navigate the process more effectively.


Commercial bridging loans are a versatile and powerful financial tool for businesses and investors needing immediate access to capital. By understanding how these loans work, their costs, and the application process, you can make informed decisions and leverage this financing option to achieve your business goals. Donkey Finance provides a user-friendly and efficient way to secure bridging loans, offering expertise and support throughout the process.