Quick answer
A business bridging loan is short-term property-secured finance that covers a gap: buying before you've sold, paying now for money that arrives later, or holding on until a refinance settles. The lender looks at the security property and the event that will repay the loan, such as a sale contract or approved refinance. Terms usually run from a few weeks to twelve months.
Key points
- Covers a timing gap, not a long-term need.
- The repayment event is the heart of the application.
- Secured by caveat, second mortgage or first mortgage.
- A buffer past your expected date avoids costly extensions.
- Typical term
- A few weeks to 12 months
- Security
- Residential or commercial property
- Common exits
- Property sale, refinance, contract payment
- Biggest risk
- The exit arriving late
In business, the money is often there. It just isn’t there yet. The old warehouse is on the market but the new one has to be secured now. A buyer has signed for your second business, but settlement is ninety days off and the expansion needs funding today. A refinance has been approved, but the bank’s documents won’t be ready for six weeks. A bridging loan is built for exactly these gaps.
How bridging works
You borrow against property for a short, defined period. When the expected event happens, such as the sale settling or the refinance funding, the bridging loan is paid out in full. Because the lender is relying on that event, most of the application is about proving it’s real and likely to happen on time.
The gaps we see most
| Situation | What bridges it | Typical exit |
|---|---|---|
| Buying new premises before selling the old | Bridging loan over one or both properties | Sale of the old premises |
| Settling a business purchase before bank funding is ready | Short private loan over property | The bank refinance |
| A big payment due in a few months | Caveat or second mortgage | The contract payment |
| A development or subdivision about to complete | Short loan over the land or other property | Sale of lots or refinance |
| Paying out a partner while a refinance is assessed | Private first or second mortgage | The new long-term loan |
What a lender will ask for
- Details of the security property: address, estimated value and any existing loan balance.
- Evidence of the exit: a sale contract, a formal refinance approval, a contract showing the payment date, or an agent’s appraisal if the property is yet to sell.
- A realistic timeline, including how long settlement or the refinance usually takes.
- Everyone on title, with ID and the ability to sign.
Business financials are usually secondary. A lender who can see the sale contract and the title has most of what it needs.
Build in a buffer
The most common bridging problem isn’t approval, it’s delay. Sales fall over, settlements get pushed back, and refinance documents take longer than promised. If your exit is due in eight weeks, consider a term of four or five months. The small extra cost of a longer term is almost always cheaper than an extension fee and the stress of renegotiating with a deadline already past. Our guide to planning the exit from a short-term property loan walks through how to stress-test your dates.
Speed
Once title, valuation and signers are sorted, $20k to $250k is possible same day and larger bridging loans up to $5m are possible within 24–48 hours. Where speed really matters, a caveat loan is often the quickest structure. For larger or longer bridges, a second or private first mortgage gives more room.
An illustrative example
A Hobart physiotherapy practice buys a building for its second clinic, settling in 30 days. Its current rooms, which it owns, are under contract to sell, but that settlement is 75 days away because the buyer is waiting on a subdivision. The practice needs $650,000 for the new purchase in the meantime. A private lender takes a first mortgage over the current rooms and a second over the new building for six months. The loan is cleared when the old rooms settle, with time to spare if that date slips. Illustrative only.
Tax and costs
Selling business property can have GST and capital gains tax consequences, and those can change how much of the sale price is actually available to repay a bridge. Talk to your accountant about what you’ll net after tax before you rely on the full sale price as your exit. On the loan itself, ask about establishment, valuation, legal and discharge costs, and how interest is charged across the term.
When bridging isn’t the answer
If there’s no specific event that will repay the loan, it isn’t really a bridge. It’s a longer-term loan, and you’ll usually be better served by a second mortgage or term loan with a structure designed for regular repayments. Be honest with yourself about this. A bridge with a vague exit is one of the more expensive mistakes in business lending.
Bridge the gap
Tell us what you’re buying or waiting on, the property you could use and when the money arrives. There’s no credit check to ask, your enquiry stays with one person rather than going to a list, and that person will call you to talk through the dates. Accurate answers about your exit mean we can tell you quickly what’s possible. Send your enquiry.
Frequently asked questions
What can a business bridging loan be used for?
Buying new premises before the old ones sell, paying a deposit while finance is approved, settling a business purchase before a refinance completes, or covering costs until a large payment arrives.
Do I need an unconditional sale contract?
It helps a lot, but it isn't always essential. If the property hasn't sold yet, lenders look at realistic value, how saleable it is and how long the term is.
Is interest paid monthly?
It varies. Many bridging loans capitalise or prepay interest so there are no monthly repayments, and everything is cleared when the exit happens.
What if the sale falls through?
Talk to the lender early. Most will consider an extension or a change of exit, but there are usually costs, which is why a buffer matters.