How to Use Bridging for Commercial Properties
Even before the pandemic first unfolded in the early month of 2020, the British high street was racked with uncertainty due to Brexit, rising rents and competition from online retailers. As the pandemic unfurled, both big and small businesses on the high street applied for financial assistance in the form of furlough, BBLs, CBILs and other loans in order to stay afloat. Now, as the vaccine continues to be rolled out and the government sets out a tentative roadmap to remove all barriers to social interaction by the end of June there is a renewed interest in the British high street. However, unlike the above forms of financial assistance, it is likely to be the case that many people have not considered the possibility of using bridging finance to help their business.
When the pandemic hit and shops and businesses were forced to close, many lenders withdrew their commercial products and some stopped lending altogether. However, anecdotally many brokers and lenders have shared that commercial enquiries were still coming in regularly from investors. Now, as the market opens back up, there are new commercial products being launched at competitive rates that are marginally higher if not at the same rate as many residential products.
For many hotel owners, pub landlords and more these new commercial products will help them get back on their feet and trading in time for the re-opening of the food and drink and leisure sectors. Naturally, the main issue here as with any bridging loan is the exit, and this could be tricky. However, with many lenders offering 2 year terms, this allows a comfortable amount of time to see which way the market is heading and ultimately get the business back to pre-pandemic profitability. It is reasonable to expect that in just one or two years the availability and range of commercial mortgages will also increase.
As well as this, commercial bridging can be an excellent way to finance your new venture. With the pent-up demand in the market now, someone thinking of launching a pub in time for summer 2021 could use bridging finance to get them started and allow them the cashflow they need to inject into their business, allowing time to build up a trading history on a 2-year term. This could then be refinanced onto a commercial mortgage.
As well as this, the specialist finance market is becoming more and more competitive on short-term finance for commercial to residential conversions. With housing being more in demand than ever, the opportunity for commercial to resi conversions is huge and bridging lenders are scrambling to supply the market with lower rates than you’d traditionally expect for a development loan.
Although there is still uncertainty in the market, there is also optimism and hope for the future in the business world and the specialist finance market has reacted quickly to offer a quick and clean option for many businesses anticipating a return to normality.