Definition
Bridging finance is short-term lending that fills the period between needing money today and receiving it from something already lined up, for example settlement of a sale, a new long-term loan or a contracted payment. Property is the usual security, terms run for months rather than years, and interest is commonly paid upfront or capitalised. It relies on the planned exit happening on time.
Bridging finance takes its name from its purpose: it carries a business across a gap to a known destination.
Typical uses
Business owners use bridging finance to buy premises before selling another property, to meet a deadline while a bank refinance is completed, or to fund a need until a contract payment arrives. The common thread is a specific, expected source of repayment.
How interest works
Interest may be paid monthly, prepaid from the loan at the start, or capitalised and repaid with the balance at the end. Each method shifts both the funds you actually get and the balance left to clear at the end. Our bridging loans review explains the options.
The exit is everything
Lenders assess the exit closely: how certain it is, when it will happen and what evidence supports it. Read our guide to exit strategies. If you have a gap to bridge, make one enquiry with your expected exit date.
Common questions
How long do bridging loans last?
Usually months rather than years, set to cover the expected time until the exit event with a buffer.
What if the exit is delayed?
Expect to negotiate more time or move to another lender, and both normally cost extra. Contact the lender early.
Sources and further reading
Related terms