Using Bridging Finance to Release Capital for Business Investment with a Short-Term Exit Strategy

Client Background

Our client was a single applicant based in Worsley, Manchester, who owned a detached residential property valued at approximately £1.1 million with an existing mortgage balance of around £506,000.

The client was a self-employed company director who operated a successful business with strong, consistent profitability. The business had generated net profits of approximately £225,000 in 2016, £234,000 in 2017, and £224,000 in 2018.

This placed the client in a strong overall financial position, combining substantial income with significant property equity.

The Scenario

The client required funding to support ongoing business growth and operations.

His objectives were to:

• Raise approximately £244,963
• Inject additional capital into the business
• Access funding quickly rather than waiting for a traditional refinance
• Structure the borrowing on a short-term basis
• Exit the facility through incoming business receivables or refinance

The client’s business had a number of outstanding invoices expected to be paid within a relatively short timeframe, which formed a key part of the proposed repayment strategy.

The Challenges

This case involved several important considerations that required fast and commercially focused structuring.

The transaction centred around a business-purpose capital raise, which limited the suitability of many traditional residential lending products. In addition, the client required funding quickly to support immediate commercial opportunities.

The structure also involved second charge lending, with the existing mortgage of approximately £506,000 remaining in place. The proposed repayment strategy relied on short-term business receivables and/or refinancing, requiring a lender comfortable with flexible exit structures.

Although the client had sufficient income to qualify for more conventional lending, traditional mortgage options were unsuitable due to the urgency involved and the immediate need for liquidity.

The Solution

We arranged a tailored second charge bridging loan designed specifically to release equity quickly while allowing the existing mortgage to remain in place.

The funding solution included:

• A net loan amount of approximately £244,963
• A 6-month term
• A combined loan-to-value of approximately 70%
• Rolled-up interest with no monthly repayments required
• Second charge security against the property
• Fees added to the loan to preserve working capital

The selected lender provided the flexibility required for a second charge, business-purpose bridging facility.

The structure enabled the client to unlock capital efficiently without disrupting the existing mortgage arrangement.

Implementation Process

This case required a fast and commercially focused approach throughout the transaction.

We carried out a detailed assessment of the client’s business performance, financial position, and existing borrowing structure before designing a bridging facility aligned to the short-term funding requirement.

A suitable lender was sourced that could accommodate the second charge structure and business-purpose borrowing while also delivering funding within the required timeframe. The facility was then aligned carefully with the proposed repayment strategy through business receivables and/or refinance.

Throughout the process, communication between all parties was managed proactively to ensure the transaction progressed efficiently and completed without unnecessary delays.

The Outcome

The bridging loan completed successfully, enabling the client to release capital quickly to support business growth.

As a result, the client was able to:

• Inject capital into the business quickly
• Take advantage of immediate commercial opportunities
• Avoid delays associated with traditional refinancing
• Maintain flexibility through rolled-up interest with no monthly repayments
• Exit the facility through business income or refinance