7 Small But Important Criteria for Obtaining Bridging Loans

Securing bridging finance from reputed bridging loan companies relies heavily on applications that meet all necessary criteria. Hence, after researching several lenders of the UK market, we narrowed down these few but important criteria that are requested when applying for a bridging loan.

Loan Size
Every lender has a limit set for the loan they offer. Usually, in commercial bridging, it is between £500,000 and up, though many lenders start at £ 750,000.

Term
The term is the span of period up to which you have borrowed the amount. Typically, in most firms, it is between 1 to 18 months, but certain reputed firms also allow you to extend it to 36 months. However, it differs for the regulated non-commercial sector where FCA thrusts a mandatory 1-year limit.

Bridging Loan Security   

One of the most important factors that lenders consider while giving bridging loans is the security they deem acceptable. The assets eligible for security include:

• Land - Car parks, development land, barn, car parks, etc.
• Property - Flats, houses, mixed-use, care homes, offices, hotels, shops, restaurants, etc
• Assets such as jewellery antiques, trade assets, vehicles, etc.

Acceptable Borrowers
In most cases, loans specify who are acceptable borrowers for them. For example, adults who are at least 18 years old. Additionally, borrowers can also include private individuals, limited companies, partnerships, pension funds, and offshore companies.

Creditors History
Credit history is relatively less important while applying for bridging finance in personal or commercial property. Mostly, lenders are more concerned about the security. As long as they feel the security is acceptable, they will be happy to lend money even to a company with poor credit history.

Income Proof
Often known as income verification, this is a standard practice for all commercial loans. It may come in the form of bank statements, tax returns, or audited accounts.

Exit Strategy
Your plan to pay your loan off is referred to as your exit strategy. When applying for a bridging loan, lenders would want to know how you will pay them back and exit the loan. It allows them to assess the risk level. Here are the most common exit strategies:

• Selling an existing property
• Business Merger
• Cashing in Investments
• Selling a business or shares in it
• Proceeds of a debt repayment