Quick answer
A business bridging loan is short-term finance secured over property that covers the gap between two events: buying before selling, settling before a refinance completes, or meeting a cost before a known payment arrives. In New Zealand, specialist lenders arrange bridging finance quickly against residential or commercial property, with up to $5m possible within 24–48 hours once the file is complete. The defining feature is a clear exit.
Key points
- Covers a gap between two known events.
- Secured over property, often more than one.
- Interest may be capitalised rather than paid monthly.
- Only works with a firm, dated exit.
- Typical size
- $20,000 to $5,000,000
- Term
- Usually one to 12 months
- Speed
- Up to $5m possible within 24–48 hours
- Purpose
- Business purposes only
Timing rarely lines up neatly in business. A new site becomes available before the old one has sold. A business purchase settles before the bank has finished its process. A large payment is guaranteed but not due for two months. Bridging finance fills that gap, and then gets out of the way.
Two kinds of bridging
Closed bridging has a fixed exit date: a sale is unconditional, a refinance is formally approved, or a payment is contracted for a known day. Lenders like closed bridges because the risk is clear.
Open bridging has an exit that’s expected but not yet certain, such as a property that’s listed but not sold. Lenders still offer it, but they’ll want more equity, a realistic sale price and a buffer for delays.
Typical business uses
- Relocating premises. Buying a new workshop before the current one sells.
- Buying a business. Settling the purchase before longer-term bank finance is drawn.
- Waiting on a payout. An insurance claim, an estate distribution or a legal settlement.
- Releasing capital. Funding a project while a property is marketed.
- Covering tax. Paying IRD now from the proceeds of a sale already underway.
How it’s secured and sized
Bridging loans are secured over property, often more than one: the property being sold, the one being bought, or another the owners hold. The lender looks at total equity across the security, the exit amount and the time to exit.
| Factor | What the lender checks |
|---|---|
| Security value | Valuation of every property offered |
| Existing debt | What has to be paid out on each title |
| Exit amount | Sale price, refinance approval or payment amount |
| Exit date | How firm, and how long until it lands |
| Buffer | What happens if the exit is late or lower |
Capitalised interest, explained simply
Many bridging loans don’t require monthly repayments. Instead, interest is added to the balance and the whole amount is repaid when the exit lands. That eases cash flow during the gap, but it also means the balance grows every month. Ask for a dollar figure showing what you’ll owe at the expected exit date, and again if the exit is two or three months late.
How fast can it move?
With property-backed bridging, up to $5m is possible within 24–48 hours once the valuation, title work, signatures and legal advice are complete. Smaller bridges of $20k to $250k are possible same day (property-secured). What slows things down:
- Waiting for valuations on several properties.
- Trust or company structures that need extra signatures.
- An existing lender slow to provide payout figures.
- Uncertainty about the exit.
An illustrative example
A Hawke’s Bay winery has agreed to buy a neighbouring 12-hectare block for $1.6 million, settling in three weeks. It plans to fund the purchase partly by selling a separate cottage it owns, already on the market, and partly with a long-term rural loan that the bank needs eight weeks to finalise.
A bridging lender advances $1.6 million secured over the new block and the cottage, with interest capitalised. The purchase settles on time. Six weeks later the bank loan is drawn, the cottage sells, and the bridge is repaid in full.
Keep the bridge short
The longer a bridge runs, the more it costs. Before signing:
- Confirm the exit in writing where you can: an unconditional sale agreement, a formal bank approval or a contract.
- Ask what an extension costs, and whether it’s automatic or needs fresh approval.
- Build in a buffer of a month or two.
Our guide to getting out of a short-term property loan covers this in more depth.
Compare your options
If the gap is under a few weeks and the amount is small, a caveat-style loan may be quicker. If it’s longer, a first mortgage on a longer term could be cheaper. Run your numbers through the funding speed finder.
Who needs to sign
Bridging loans often involve more than one property, and sometimes more than one owner. Every registered owner of each property offered as security will need to sign and receive independent legal advice. If a property is in a family trust, all trustees sign, and the lender will check the trust deed. Lining up signatures early is one of the easiest ways to keep a bridge on schedule.
Ask before you commit
Asking what’s possible doesn’t touch your credit file, and we don’t spray your details across a list of lenders. A real person reads your enquiry, looks at the gap and the exit, and calls you with a realistic plan. Start your enquiry.
Frequently asked questions
What's the difference between bridging finance and a caveat loan?
Bridging describes the purpose: covering a gap. A caveat-style loan is one way of securing it. Bridging finance can also be secured by a first or second mortgage.
Do I make repayments during a bridging loan?
Often not. Many bridging loans capitalise the interest, adding it to the balance, so the whole amount is repaid from the exit. Others require monthly interest payments.
What if my sale falls through?
That's the main risk. Lenders ask about it upfront. Options include extending the loan, refinancing or selling another asset, but each costs time and money, so build in a buffer.
Can I use bridging finance to buy commercial premises?
Yes. A business might buy new premises before selling the old ones, using bridging finance secured over both until the sale settles.