Quick answer
A private bridging loan for business is short-term finance, secured by property, that covers a gap between a cost due now and money arriving later, such as a property sale, a refinance, a settlement or a large receivable. Private lenders focus on the strength of that incoming money and the security, so approvals can happen in days when a bank's bridging process would take weeks.
Key points
- Covers a timing gap rather than a long-term need
- The exit is usually a specific event: a sale, refinance or payment
- Can be structured as a caveat, second or first mortgage
- Interest is often capitalised so there are no repayments during the bridge
- Loan size
- $20,000 to $5,000,000
- Typical term
- 1 to 12 months
- Exit
- Sale, refinance or incoming funds
- Security
- Residential or commercial property
A lot of business finance problems aren’t really about money. They’re about timing. The money is coming, from a sale, a refinance or a contract, it just isn’t here yet. A private bridging loan fills that gap.
What a private bridging loan covers
Common gaps we see:
- Buy before you sell. You need to settle on new premises before the old property has sold.
- Refinance delay. The bank has approved a refinance in principle but won’t settle for six weeks, and a debt is due now.
- Settlement on a business purchase. The deposit is paid, settlement is days away and the bank’s funding isn’t ready.
- Waiting on a large payment. A tax refund, an insurance payout or a contract milestone is due, but a supplier or the ATO needs paying first.
- Development or renovation finish. A property is nearly complete and will be sold or refinanced once finished.
In each case the exit is specific and identifiable. That’s what makes bridging attractive to private lenders.
How private bridging is structured
The security is property you already own. The lender takes a caveat, second mortgage or first mortgage over it depending on what’s already on title and how much you need.
Two features are typical:
Capitalised interest. Instead of monthly repayments, interest is added to the loan balance and paid at the end. This protects cash flow during the bridge, but you need to know the final payout figure, because it grows each month.
Defined term with a buffer. The term is set to cover the expected exit date plus a margin. If your sale is expected to settle in three months, a six-month term gives breathing room.
Peak debt: the number to watch
When interest is capitalised, the lender looks at peak debt, which is the total owed at the end of the term including interest and fees. Peak debt, not the starting loan, is what must fit inside the lender’s LVR limits and inside your exit proceeds.
An illustrative example: you borrow $400,000 for six months with interest and fees capitalised. If those add up to $36,000, peak debt is $436,000. Your sale or refinance needs to clear that comfortably, plus any first mortgage, agent’s fees and tax.
The exit plan checker does this sum for you.
What lenders want to see on the exit
| Exit | Evidence that helps |
|---|---|
| Property sale | Agency agreement, appraisal, marketing plan or a signed contract |
| Refinance | A broker’s assessment, bank approval in principle, lodged financials |
| Business sale | Signed heads of agreement or contract, settlement timeline |
| Incoming payment | Contract, ATO notice of assessment, insurer’s letter |
Stronger evidence usually means a better offer and fewer conditions.
Risks and how to manage them
The main risk in any bridge is the exit running late or coming in short. A sale takes longer than expected or settles at a lower price; a refinance is declined. Manage it by setting a realistic term, borrowing only what you need, keeping peak debt well inside the exit proceeds, and agreeing early what an extension would look like.
A worked example: bridging a business premises move
An Ipswich panel beater bought a larger workshop for $1.25 million before selling the old one, which was worth about $800,000 with no debt. The bank wanted the old workshop sold first. The vendor of the new site wanted settlement in 30 days.
A private lender took first mortgages over both properties and advanced the full purchase price plus stamp duty and costs. Peak debt was about $1.35 million against combined security of around $2.05 million, a comfortable ratio for the lender. Interest was capitalised so the business had no repayments while it moved equipment and staff.
The old workshop was listed the week after the move and sold in four months for slightly more than expected. Sale proceeds cleared most of the bridging loan, and the bank refinanced the balance over the new workshop on standard commercial terms.
Bridging checklist
- get an agent’s written appraisal of the property you’re selling before you borrow
- set the term for the realistic sale time, plus at least two extra months
- confirm whether interest will be capitalised or paid monthly
- check that a fallback exists if the sale takes longer or achieves less
- understand any minimum interest period if the sale happens quickly
Bridge the gap with us
If you know when the money is coming but need it now, tell us the amount, the security and the expected exit. We’ll come back quickly with whether a bridging loan stacks up and which structure suits. There’s no credit check when you first enquire, and your file stays with our desk unless a lender genuinely fits.
Give us accurate dates and figures in the form so we can get it right first time. Start your enquiry, or read about settlement deadlines and then send us the details.
Frequently asked questions
What's the difference between a bridging loan and a caveat loan?
Bridging describes the purpose: covering a gap until money arrives. Caveat describes the security: a caveat lodged on title. A private bridging loan can be secured by a caveat, a second mortgage or a first mortgage depending on the deal.
Do I have to make repayments on a bridging loan?
Often not. Many private bridging loans capitalise interest, meaning it's added to the loan and paid out at the end from the sale or refinance. That keeps cash flow free during the bridge but means the payout figure grows each month.
What if my property doesn't sell in time?
Talk to the lender before the due date. Extensions are often available when the property is genuinely on the market at a realistic price. That's why it's wise to agree a term with a buffer of a few months beyond your expected sale.
Can I bridge against money owed to my business?
Sometimes, when the receivable is solid, such as a contracted payment, a tax refund or an insurance settlement, and you also have property to secure the loan. The property is the security; the incoming money is the exit.