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Secured loans and commercial bridging loans are similar financial products but there are notable differences that mean it’s important to carefully consider your business’s needs before applying.
Secured loans can be used for a multitude of purposes and are generally a good option for asset-rich businesses because one or more assets must be provided as collateral. This considerably reduces the lender’s risk and can open up access to lower interest rates.
Commercial bridging loans are a short-term form of funding that literally ‘bridge the gap’ for borrowers financially. A bridging loan is more appropriate if a business is purchasing a property but hasn’t completed the sale of its existing one. In this case, the bridging finance enables them to proceed with the purchase.
Loan term
Time to obtain
Focus on collateral
Interest rates
Whether a secured loan or a bridging loan is more appropriate depends on the purpose of the financing and whether it’s to provide short-term or long-term financial support for your business activities.
You may be able to obtain a secured loan with a low interest rate that allows your business to grow by investing in a property or other type of asset over a longer term. A secured loan offers financial stability to a business, as repayments are predictable and fixed.
If your financial needs are time-sensitive, however, a bridging loan is likely to provide the rapid and flexible access to funding that you need – perhaps to secure a commercial property without having to wait for your sale to go through.
UK Business Finance are commercial finance brokers with extensive experience in helping businesses access vital funding. We can guide you towards the best type of finance for your needs and offer our services free of charge. Please get in touch to find out more.
We work across a wide range of sectors throughout the UK, providing specialist advice to each sector.
Can I get a secured loan if my business doesn’t have any assets?
When taking out a loan for a business, you have the option of a secured loan or an unsecured loan.
Can I get a mortgage for a commercial property?
Commercial property mortgages offer valuable flexibility to landlords and those investing in commercial property for their own business use.
Does business finance affect my personal credit rating?
Business finance can sometimes affect your personal credit rating, the main issue being how your business is structured.
Advantages and disadvantages of asset-based lending
Asset-based lending allows businesses to use their existing balance sheet assets as collateral to secure funding.