bridging and development finance
What is development/ bridging finance?
Development and bridging finance are designed to help businesses grow and evolve. Both of these types of finance are often used in the commercial world for the purchase of or investment in property. Although the usage of these products can extend beyond that to cover business development or bridging a gap between short and long term borrowing.
Bridging Finance Key Facts
A type of short-term loan, bridging finance bridges the gap, or financial shortfall, until permanent finance becomes available. Bridging loans are most commonly used for property purchases and are normally secured against commercial or residential property.
The primary type of bridging finance in called closed bridge. Closed bridge finance is when there is a set end date for when the loan will be repaid. An example would be a bridging loan to cover the sale and purchase of property, where contracts have been exchanged and a completion date is set. The loan would be repaid upon completion of the property sale.
Development finance key facts
Development finance is a short-term loan, often for a 24-month period. The purpose of the loan is to allow a developer or investor to purchase land or property with the intention of developing and reselling it for commercial gain. Development exit funding is also available to bridge the gap between completing the development project, and selling the completed property or properties.