Business bridging loans: covering the gap between two dates

Business life is full of timing gaps. The new premises are available now but the old ones won’t sell for two months. The deposit on a business purchase is due before the bank has finished its assessment. A contract needs equipment and staff weeks before the first payment. A bridging loan fills that gap, using property as security, and is repaid in one go when the money you’re waiting for arrives.

It’s a short, purpose-built tool. Used well, it lets a business take an opportunity it would otherwise miss.

How business bridging works

Every bridging loan has two events:

• Event A: the thing that has to be paid for now.
• Event B: the thing that will repay the loan later.

The lender looks at both. Is Event A real and urgent? Is Event B likely, and when? Then they check the property security covers the amount with a safe buffer.

Event A (pay now)	Event B (repays later)
Buy new premises	Sale of the old premises
Deposit on a business purchase	Main acquisition finance
Equipment and wages for a new contract	Contract progress payments
Large ATO debt with enforcement action	Refinance once BAS and returns are lodged
Settlement on a commercial property	Longer-term commercial loan approval

Structuring the loan

Bridging loans are usually structured to put as little pressure as possible on the business during the gap:

• Interest capitalised or prepaid, so there are no monthly repayments.
• A term slightly longer than the expected gap, to allow for delays.
• Security over the property being sold, another property, or both.
• A single repayment when Event B happens.

For smaller and very short gaps, a caveat loan may be quicker. For larger or longer gaps, a first or second mortgage gives more room.

What makes a bridging application strong

1. Evidence of Event B. A listing agreement and agent’s appraisal, a conditional finance approval, or a signed contract with a payment schedule.
2. A realistic timeline. Allow extra time for sales and settlements.
3. Enough equity to cover the loan plus capitalised interest.
4. A fallback. What happens if Event B is late or smaller than expected?

An illustrative example

A Brisbane physiotherapy clinic buys a larger building for about $1.6 million, with settlement in six weeks. Its current building is listed and expected to sell for about $900,000, but probably not before the purchase settles. A bridging loan secured over both properties covers the gap, with interest capitalised. The old building sells ten weeks later and the bridging loan is repaid from the proceeds, leaving the clinic with a longer-term loan on the new building.

Costs and risks

Bridging loans cost more than standard long-term loans. The main risk is Event B taking longer or delivering less than planned. A property might sell for less, or a contract payment might slip. Build in a buffer on both time and amount, and ask the lender up front what an extension would cost.

Our funding speed finder helps you see whether your timeline is realistic before you commit.

Bridging with or without the bank

Many bridging needs come up because a bank’s timeline doesn’t match the deal’s. The bank might be willing to lend on the new premises, but not until the old ones have sold, or not until next year’s financial statements are lodged. A short-term bridging loan doesn’t replace the bank; it buys time for the bank to do its part. That’s why the strongest bridging applications include a letter or conditional approval from the longer-term lender, or at least a clear outline of what they’ll need and when.

If you don’t yet have a longer-term lender lined up, say so. A bridging loan can still work if the property equity is strong and the sale is realistic, but the lender will want a wider safety margin and may shorten the maximum term. Being honest about where the exit stands means the first offer you get is one you can rely on, rather than one that changes halfway through.

Keep a simple weekly check-in with your agent, solicitor and accountant while the bridge is running, so any slippage is spotted early.

Need to bridge a gap?

Tell us about both events, the dates and the property. There’s no credit check to enquire and your details stay with one person, not a list of lenders. A real person works through both sides of the bridge with you and calls with options.

Please be accurate on the form about the property values, what’s owing and the timing of the money you’re waiting for, so the loan is structured to fit. Start your enquiry.