What is Bridging Finance?

Bridging finance is a short-term loan used to “bridge” the gap between a business or individual’s financial need and their long-term funding solution. It is typically used in situations where there is a need for immediate funds to cover a temporary shortfall in cash flow, and the borrower is unable to secure traditional financing.


Bridging finance can be used for a wide range of purposes, including property purchases, refinancing, renovations, and business cash flow.   Within Shadowfax Funding Solutions, bridging is most often used in property transactions, where a buyer needs to secure funds quickly to purchase a property, but has not yet sold their current property or secured long-term financing.


Bridging finance is typically more expensive than traditional forms of financing. The interest rates are usually higher and the repayment period is shorter, typically ranging from a few months to a year. This makes bridging finance a good option for borrowers who need funds quickly, but are able to secure long-term financing within a short time frame.  With longer term lenders taking months to put facilities in place (we have had experience of 6 months with one lender) the appeal of being able to purchase a property or borrow quickly for some borrowers outweighs any cost implications. 


The loan should only be used as a short-term solution and the borrower should have a clear plan in place for how the loan will be repaid. They should also secure long-term financing as soon as possible to avoid taking on additional debt.  Normally we work on the long term solution at the same time as organising the bridging finance.  

To summarise:

Bridging finance can be used for a variety of purposes, including:

  1. Property purchases: A bridging loan can be used to purchase a property quickly when there is a time-sensitive opportunity, such as an auction, before long-term financing is secured.
  2. Refinancing: A bridging loan can be used to refinance a property or business when a long-term loan is in the process of being arranged.
  3. Renovations: A bridging loan can be used to fund renovations on a property when the funds from a sale are not yet available.
  4. Business cash flow: A bridging loan can be used to cover short-term cash flow gaps in a business.

For more information or to discuss bridging finance further, please email Steve.smith@shadowfaxfunding.com or  email the team by using the contact form here.


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