Bridging Loan

A bridging loan is interim financing for an individual or business, typically taken out for a period of 2 weeks to 3 years, until permanent or the next stage of financing can be obtained. Money from the new financing is generally used to "take out" (i.e. to pay back) the bridge loan, as well as other capitalization needs.

A bridging loan may be closed, meaning it is available for a predetermined timeframe, or open in that there is no fixed payoff date (although there may be a required payoff after a certain time). Bridge loans are amortized over a shorter period, and various fees and other "sweeteners" (such as equity participation by the lender in some loans).

What is a bridging loan for:

  • Corporate recapitalization
    A bridging loan can be used by a business to ensure continued smooth operation during a time when for example one senior partner wishes to leave whilst another wishes to continue the business. The bridging loan could be made based on the value of the company premises allowing funds to be raised via other sources for example a management buy in.

Wilson ran a successful subscription business along with his buisiness partener Raj. Raj had to leave the company at short notice for personal reasons and wanted to sell the business where as Wilson wanted to continue running it by himself.

Wilson came to MAXX needed to secure some funding in order to buy Raj out of the business and to keep the business running smoothly through the transition period. We were able to lend a significant sum to Wilson based on the companies business premises which they owned outright and with some additional security from Wilson’s home. This gave Wilson enough time to raise funds through a management buy-in in order to repay the bridging loan shortly after.

  • Asset Buyout

    A property may be offered at a discount if the purchaser can complete quickly with the discount off setting the costs of the short term bridging loan used to complete. In auction property purchases where the purchaser has only 14–28 days to complete long term lending such as a buy to let mortgage may not be viable in that time frame where as a bridging loan would be. Loan-to-value (LTV) ratios generally do not exceed 65% for commercial properties, or 80% for residential properties, based on appraised value.

  • Pre-IPO
    An offering of shares in a company before its initial public offering (IPO). Pre-IPO offerings are available only to a limited number of individuals, and are done in advance of an expected IPO. Pre-IPO prices are generally much lower than they would be at the IPO, but are risky for the investor, as their value is contingent upon the company eventually making an IPO. This is because pre-IPO shares attract little demand in situations in which there is insufficient demand for an IPO soon after; they usually become illiquid securities.

MAXX Capital Finance Limited can provide a final debt financing to carry the company through the immediate period before an initial public offering.

Why use MAXX Capital Finance Limited?
Most banks do not offer bridging loans because the speculative nature, risk, lack of full documentation, and other factors, do not fit the bank’s lending criteria. MAXX Capital Finance Limited can make an impact in meeting your needs for urgent short term finance with flexible loan structures.

If you would like to take advantage of our service then please complete your details on the short form on the right panel and we will get a bridging loan specialist to get in contact with you. MAXX has a vast amount of experience with bridging loans and we understand that speed and quality of service is of the essence when seeking advice on how to fund your new purchase.