Can A Limited Company Apply For A Bridging Loan?

Bridging loans are available to limited companies in a similar way they are to any individual or business – the application process is exactly the same. What differs is a limited personal liability; securities offered are business assets, as opposed to personal assets.

Here we explain the purposes of a bridging loan for this situation, its benefits for limited companies, and how our experienced brokers can ease this process for you. 

Why are bridging loans useful for limited companies?

Bridging loans can be useful for limited companies for several reasons – they are a popular method for raising capital to be spent on improvements to an office or business environment.

A bridging loan is a short-term loan (12 months), beginning at £25,000, which can accommodate a limited company’s internal needs; financing renovations of office spaces, including purchasing equipment or machinery.

Alternatively, a higher cap bridging loan can finance property purchases – if you are relocating to a new office building. 

Lastly, a commercial bridging loan will be beneficial to time-sensitive projects. With bridging finance your limited company can get things moving without delay (typically a loan can be taken out within weeks, depending on a lender’s criteria). 

As a limited company, how does applying for a bridging loan differ?

The main difference exists in the liability. A bridging loan taken out under a limited company will mean liability falls on the business owners – they would be responsible for outstanding debt, however, this is limited to the capital set against the loan. 

Notably, individual financial circumstances are separated from the process. For instance, a personal loan may involve a lengthy process, with credit checks, or references to an individual’s income. 

Alternatively, a bridging loan can be secured without the same stringent requirements that come with traditional finance. 

A commercial bridging loan for a limited company would be reliant upon sufficient security associated with the business, and not any personal security. Therefore, if a company is faced with financial difficulties, any personal assets will not be at risk of seizure due to defaulting on the loan.

What type of security do lenders require? 

A limited company would be required to offer business assets. Lenders will need to determine the value of a business’s collateral against a possible loan, these can be; 

Often, directors of a limited company may be legally bound by personal guarantees in the wake of defaulting on a loan – this is why it is essential to consider your exit plan carefully, making sure you are able to repay the loan within the term time.

We can assist in getting the right bridging loan for your limited company’s purposes, and provide assistance with any documentation required by lenders alongside legal processes.

How is a bridging loan repaid? 

Bridge finance offers the potential to expand your company when cash is unavailable - giving you options, and funds to enhance a company’s potential profit down the road. This money can then be used to repay the loan within the term.

Additionally, one of the benefits of a bridging loan is that interest payments can be “rolled-up” – specifically when paid before the duration of the loan ends. This allows flexibility for a limited company, as early repayments do not incur additional fees. 

How to get the best bridging loan

To discuss your options, do not hesitate to contact our team to aid in finding the best bridging loan available for your circumstances.

We have established relationships with lenders, who can potentially secure you a favourable LTV (Loan-to-Value). These lenders are accustomed to providing limited companies with specialized bridging loans on a regular basis.

In contacting us, we can assess how best to proceed with your case, and if a bridging loan for your limited company is the best option for a short-term financial solution.