A Bridging Loan (U.K) or a Bridge Loan (U.S) means exactly the same thing. Just different terminolgy, depending on which side of the pond you are on.

When an individual homeowner or a business finds itself needing money and has a shortfall of cash between where they need to get to, a bridging loan helps to bridge over the shortfall.

 
A Bridging Loan can be used for any purpose within reason like holidays, or paying unexpected bills, or carrying out home improvements.

However these sort of dilemmas are usually dealt with by the average person by (if needing finance) taking out a personal loan or by taking out a remortgage.

A remortgage could be seen as quite an extreme way of raising cash for some of the above issues, however sometimes a remortgage can take you onto a better rate and actually save you money. Add to that mortgage companies normally want to know what a remortgage is for first and may insist the money is used only for home improvements. After all they are guaranteeing the monies loaned. On your property.

Bridging Loans are typically used when an opportunity arises, or a situation arises that needs to be grasped with both hands or cannot be avoided.

Examples would include where you own your home or have a lot of equity in it. You have found the dream home, the opportunity cannot be missed, you have savings but need that extra lump to get the house quick. You don’t have time to market and sell your existing property as it would take months.

By getting a Bridge Loan, you would save months in time and appeal to the seller of the property you are buying by having no chain and being able to move swiftly. Again, maybe be able to negotiate an even lower price based on this.

Your dream property may be coming up at auction and if you bid and win at a low price , an auctionhouse would often need to see you have a bridging loan or mortgage in place. They would also expect payment in a very short space of time. Usually counted in days. Although a mortgage could be used on something like this, it would take far longer to arrange and the property you are buying would need to be surveyed etc. and if you didn’t buy a lot of costs would be wasted.

Also, although your own home would need to be srveyed for the bridging loan, if securing agaisnt it, you could speed along any survey on your own property. Often auction properties can be awkward to get surveyors in when it suits you, as many other agents and surveyors need to get in to and absentee landlords can be hard to contact. All delaying the process.

Probably the most common need for a Bridging Loan, is for your Business. Business Bridge Loans are when businesses need funds to bridge a gap.
A Business opportunity may need to be grasped in a short space of time. A vital property deal may need to be secured. Very often situations arise in business where an existing business owner is distressed, they are prepared to dispose of major assets, like offline property, commercial units, land etc. Or online property like websites, trademarks, premium domain names. And they are prepared to sell on the cheap but the deal has to be one thing. Quick.

Generally speaking, the financial house or bank that is doing the lending will only value a few things as security for the bridging loan.

Those being the most recognised assets that are easiest to value:

• Residential Property
• Commercial Property
• Land

Even if you’re books are glowing and the lender can see that you are due payments at a near date in the future, but that date is not near enough for you to hold out. The banks will still want some sureity. It’s why many a successful entrepreneur (and failed) has borrowed on their house to keep their business afloat, or to seize the opportunity that was almost out of grasp that really made their lucky break.

Sometimes bridging loans aren’t just about seizing the opportunity of a lifetime. They are about business survival. We have all seen airline businesses and travel companies hit the dust almost overnight sometimes. Many of these businesses (often huge, with turnover in the hundreds of millions) have been living on borrowed time. They may seem like thay have huge assets, but if they have already used up cash reserves and their property is already loaned against then bridging loans would be their only answer. Except they would need free equity available to borrow against in their real estate holdings.

Businesses that find themselves in this predicament only have one place to turn. Venture Capital. Where you have great potential (in the eyes of the VC) and they are prepared to invest money for a stake in the equity of your business. Shares/Stocks