Airline deal shows how big bridging loans can be
An August 2017 Yahoo! Finance article notes that the German government has given Air Berlin a €150m (£136.5m) bridging loan. This is to enable the airline to continue flying after it filed for insolvency. This loan highlights the fact that bridging loans can be available for large amounts of well in excess of £1m.
The majority of bridging loans are to enable the fast completion of a house sale while waiting for a mortgage application to be completed. Most bridging loans for house purchases are for between £50,000 to £500,000. Businesses often require larger ones, with some specialist lenders offering bridging finance of £1m to £1bn.
Many lenders specialise in financing the purchase of large buildings worth over £1m, such as apartment blocks, offices, hotels and industrial units.
Large bridging loans do not have to be for property deals. They can be used to purchase stock, equipment or even shares. Normally, property owned by a business is used as security, but some lenders will consider alternatives such as equity in the business, equipment and outstanding invoices. As long as there is a clear exit strategy of when and how the loan will be repaid, then there is a good chance a bridging finance broker will be able to find a suitable lender.
A typical £1m loan will be based on around a 75% loan-to-value of the property being purchased. Interest rates can be around 1%, which equates to paying £7,500 interest per month.