# Using 100% Bridging Finance to Grow your Business
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2019-02-27
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Boost Business Growth with 100% Bridging Finance
Meta Description: Learn how to leverage your current business assets as additional security to obtain 100% bridging finance for purchasing new commercial properties. Find out
URL: https://financedigest.com/using-100bridging-finance-grow-businesshtml

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**Holly Andrews**,  Managing Director, [KIS Finance](https://www.kisbridgingloans.co.uk/)

If you are looking to grow your business by investing in a new premises, or perhaps by developing your current premises, bridging finance can offer a fast way to achieve this. But what if you don’t have the spare cash to put down a deposit and need to borrow the full amount of the purchase price? This is where 100% bridging finance could help your business.

**How to get your [current business](https://www.financedigest.com/how-to-overcome-the-current-challenges-facing-your-fintech-business.html "How to overcome the current challenges facing your fintech business") assets working for you**

![Holly Andrews](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/holly-450x533-1736839138920-compressed.jpg)

Holly Andrews

If you own other business assets, such as properties, vehicles or machinery, you can use these as additional security to help you to obtain 100% [bridging finance on a new commercial property](https://www.financedigest.com/bridging-finance-for-property-development.html "Bridging Finance for Property Development") purchase.

Having additional security in place will allow you to raise the full amount needed to purchase the premises, as well as reduce the [interest rate](https://www.financedigest.com/london-stocks-slip-ahead-of-key-interest-rate-decisions.html "London stocks slip ahead of key interest rate decisions") that you’ll be charged as it will lower the overall Loan to Value.  With a standard bridging loan, the maximum [Loan to Value is typically around 75% of the property’s](https://www.financedigest.com/exclusive-china-regulator-launches-new-probe-into-banks-property-loan-exposure-sources.html "Exclusive-China regulator launches new probe into banks’ property loan exposure – sources") value, which translates to you being able to borrow about 75% of the purchase price, having to put in the rest yourself as a deposit.

Using additional business assets will increase the overall value of the security you are borrowing against, enabling you to borrow more.

For example, if you want to purchase a property valued at £200,000, a standard bridging loan would usually allow you to raise [around £150,000 – 75% of the value](https://www.financedigest.com/industrial-flooring-market-is-anticipated-to-expand-at-a-cagr-of-over-4-during-the-forecast-period-of-2020-2030-to-be-valued-around-us-12-4-bn-by-2030.html "Industrial Flooring Market is anticipated to expand at a CAGR of over 4% during the forecast period of 2020-2030, to be valued around US$ 12.4 Bn by 2030"). However, if you used an additional property, or other business asset, worth £100k (with no mortgage or any other borrowing secured against it) as security, the bridging loan can be raised against this too.

Therefore, you could raise 75% of the total value of the [property you are planning to purchase plus the value of the additional assets together; **£200k + £100K = £300k x 75% = £225k.**  This would enable you to borrow enough to purchase the new property without needing to find additional funds](https://www.financedigest.com/some-uk-property-funds-defer-investor-withdrawals.html "Some UK property funds defer investor withdrawals") to put in.

**Using a** [second charge bridging loan](https://www.financedigest.com/whats-the-difference-between-a-first-second-and-third-charge-bridging-loan.html "What’s the Difference between a First, Second and Third Charge Bridging Loan?")

Even if you already have a mortgage, or a different type of secured loan, on a property that you want to use as additional security to purchase a new business premises, you can still use this [asset by taking the bridging loan out as a second charge](https://www.financedigest.com/switzerlands-new-energy-asset-hydro-plant-with-capacity-to-charge-400000-car-batteries.html "Switzerland’s new energy asset: hydro plant with capacity to charge 400,000 car batteries").

As long as there is sufficient equity\* in the property,you will be able to use it as security.

This could be a property already owned by the business (perhaps a [shop or office](https://www.financedigest.com/londons-battersea-power-station-reborn-as-office-and-shopping-hub.html "London’s Battersea Power Station reborn as office and shopping hub") block) or even your private home. However, it is [important to remember that any assets](https://www.financedigest.com/how-financial-services-organisations-can-address-the-vulnerability-lag-and-safeguard-their-most-important-digital-assets.html "How financial services organisations can address the ‘Vulnerability Lag’ and safeguard their most important digital assets") you place a charge against will be at risk if you default on the loan, so make sure you are not over-stretching yourself financially.

\*Equity is the value of the property that you own outright, unmortgaged. For example, if you own a property worth £250,000 and there is a mortgage of £100,000, your equity is £150,000.

**Using 100% bridging to purchase under** [market value](https://www.financedigest.com/analgesics-market-value-surpasses-us-77-3-bn-as-demand-for-nsaids-rise-at-4-1-fmi.html "Analgesics Market Value Surpasses US$ 77.3 Bn as Demand for NSAID’s Rise at 4.1%: FMI")

In some situations you may be able to obtain a 100% bridging [loan if you’re purchasing a premises for your business](https://www.financedigest.com/ant-group-starts-to-differentiate-consumer-loan-business-jiebei-from-bank-loans.html "Ant Group starts to differentiate consumer loan business Jiebei from bank loans"), but it requires renovation or refurbishments to be carried out before it is fit to use.

In this case, you could agree a [price with the seller based on the property’s current value and then undertake the necessary improvements prior to the sale](https://www.financedigest.com/mcdonalds-sales-soar-on-higher-u-s-prices-newer-menu-items.html "McDonald’s sales soar on higher U.S. prices, newer menu items") completing. You may then be able to raise finance on the new value, with the works completed, but still [buy the premises for the previously agreed price](https://www.financedigest.com/rising-oil-prices-buy-iran-time-in-nuclear-talks-officials-say.html "Rising oil prices buy Iran time in nuclear talks, officials say").

For example, a property in need of [work has an asking price](https://www.financedigest.com/eu-sees-more-work-ahead-to-implement-russian-oil-price-cap.html "EU sees more work ahead to implement Russian oil price cap") of £250,000. You agree with the seller to purchase the property in a couple of [months’ time for this price](https://www.financedigest.com/world-food-price-index-falls-for-sixth-month-in-sept-fao.html "World food price index falls for sixth month in Sept -FAO"). You also agree that, in the meantime, you will undertake improvement works costing £50,000 which will then raise the value of the property to £350,000.

You can now raise [bridging finance](https://www.financedigest.com/is-it-risky-to-use-bridging-finance-for-my-business.html "Is it risky to use bridging finance for my business?") based on the value of £350,000 but still purchase the property for the original agreed price of £250,000. This will enable you to borrow the full purchase price of the property as the Loan to Value would be less than 75% of the new [market](https://www.financedigest.com/aircraft-refurbishing-market-value-to-surpass-us-7-4-bn-as-demand-for-retrofitting-increases-by-5-7-cagr-fmi.html "Aircraft Refurbishing Market Value to Surpass US$ 7.4 Bn as Demand for Retrofitting Increases by 5.7% CAGR: FMI ") value of the property.

**Don’t forget the Stamp Duty!**

When you are calculating how much you need to borrow, particularly if you are looking to avoid having to put in any cash yourself, make sure you allow for the Stamp Duty Land Tax which is applied to [commercial properties](https://www.financedigest.com/analysis-crisis-radar-falls-on-fault-lines-in-europes-commercial-property.html "Analysis-Crisis radar falls on fault lines in Europe’s commercial property") over £150,000. If you forget to allow for this, you could find yourself [falling short](https://www.financedigest.com/analysis-china-property-financing-tweaks-fall-short-of-investor-expectations.html "Analysis-China property financing tweaks fall short of investor expectations")!


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