An Introduction To Bridging Loans

Bridge loans are short-term loans used to bridge the gap between the borrower’s current financial situation and the acquisition of a much longer and permanent financing solution. While they wait for access to a larger pool, these loans provide instant cash flow to satisfy existing obligations.

While waiting for a loan to be approved, businesses and individuals may find themselves in a liquidity crunch. During the waiting period, they might apply for a bridging loan to pay their obligations. Given the considerable risk involved, these loans are often granted for a limited period, such as 6-12 months, and come with extremely high-interest rates. They also need a significant amount of security and collateral to back them up.

This is critical for businesses, as a shortage of capital might stifle new company potential. This loan enables you to get money to take advantage of any unforeseen business opportunity. Individuals can use this loan to cover any unexpected expenses that may arise during the selling of a home or other large transaction.

A classic Bridging Loan can help you take advantage of an opportunity or bring a project to completion, effectively ‘bridging the gap’ before you need to decide on an alternative refinancing plan or achieve a full sale of the finished assets. At NCL, we have access to all of the top bridging loan providers and numerous unique facilities as a result of our working partner’s relationship, which is critical for accelerating typical applications and enabling changes that do not fit normal lending requirements.

Eligibility Of Bridge Loan

This loan is open to anyone who lives in the area. They must be at least 21 years old and no more than 70 years old. They must be the legal owner of the business or property.

Bridge Loan: Interest Rate

The current interest rates on bridge loans range from 12 to 18 percent. The processing fees for this loan must be paid by the borrower. It usually varies from 0.35 percent to 2% of the total loan amount. This loan does not have a prepayment penalty.

Repayment period

These are usually short-term loans with a 12-month repayment period. However, depending on the customer’s profile and the bank’s judgment, it may be extended for up to two years. The maximum payback period available is five years.



A bridge loan’s key benefit is its adaptability. It gives the borrower short-term financing to keep their business running smoothly. They can go about their regular business as they wait for a far greater source of income to appear. It enables real estate professionals to swiftly close on homes or complete modifications to attract new renters. It does, however, come at a great cost. They have high-interest rates because of the short-term nature of the loan and the fragile nature of the planned funding. If permanent funding cannot be secured, these loans may become bad loans, resulting in default.

At NCL, we have access to all of the top bridging loan providers and numerous unique facilities as a result of our working partner’s relationship, which is critical for accelerating typical applications and enabling changes that do not fit normal lending requirements.

by Rachel Buscall

by Rachel Buscall

Co-Founder & Managing Director at New Capital Link. Having started her career in the financial sector, Rachel demonstrated a natural flair for entrepreneurship.

New Capital Link

Alternative investment specialists offering structured opportunities across the UK & Overseas.

New Capital Link is a boutique London-based introducer that offers unique UK & global investment opportunities worldwide.

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Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.

What are the key risks?

1. You could lose all the money you invest

If the business offering this investment fails, there is a high risk that you will lose all your money. Businesses like this often fail as they usually use risky investment strategies. 

Advertised rates of return aren’t guaranteed. This is not a savings account. If the issuer doesn’t pay you back as agreed, you could earn less money than expected or nothing at all. A higher advertised rate of return means a higher risk of losing your money. If it looks too good to be true, it probably is.

These investments are sometimes held in an Innovative Finance ISA (IFISA). While any potential gains from your investment will be tax free, you can still lose all your money. An IFISA does not reduce the risk of the investment or protect you from losses.

2. You are unlikely to be protected if something goes wrong

The business offering this investment is not regulated by the FCA. Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed regulated firms. Learn more about FSCS protection here. or

Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.

The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.

3. You are unlikely to get your money back quickly

This type of business could face cash-flow problems that delay interest payments. It could also fail altogether and be unable to repay investors their money. 

You are unlikely to be able to cash in your investment early by selling it. You are usually locked in until the business has paid you back over the period agreed. In the rare circumstances where it is possible to sell your investment in a ‘secondary market’, you may not find a buyer at the price you are willing to sell.

4. This is a complex investment

This investment has a complex structure based on other risky investments. A business that raises money like this lends it to, or invests it in, other businesses or property. This makes it difficult for the investor to know where their money is going.

This makes it difficult to predict how risky the investment is, but it will most likely be high.

You may wish to get financial advice before deciding to invest.

5. Don’t put all your eggs in one basket

Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. 

A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here:

For further information about minibonds, visit the FCA’s website here.