Bridging finance for industrial property.

Industrial bridging, explained

What lenders look for in industrial property.

Let, empty or used by your business

Lenders look at an industrial unit differently depending on who uses it. If it is let, they look at the leases: how long is left on them, the rent, and how strong the tenants are. If it is empty, they look at how easily it could be let or sold. If your own business will use it, they look at the business's accounts too. A multi-let estate with several tenants spreads the risk, but means more leases to check.

What the lender will ask about

• The leases, rent and tenants, or your plan for letting empty units.
• The Energy Performance Certificate. In England and Wales a commercial property generally can't be let with a rating below E, so lenders will check it and what it would cost to improve.
• Its condition, including the roof, which on older units may contain asbestos.
• Access, yard space and eaves height, which affect how easily it can be let.
• How you will repay the loan: your exit.

How industrial bridging loans are repaid

• Refinancing onto a commercial mortgage once the units are let, or your business has moved in.
• Selling the property, often for more once it is let.
• Redeveloping the site, which usually needs planning permission.

A worked example

You buy an empty 10,000 sq ft warehouse at auction for £850,000, with 28 days to complete. The lender values it at £850,000 and lends 70% of that: £595,000 for 12 months, with the interest retained. You put in the rest, carry out light repairs, let it on a ten-year lease, and refinance onto a commercial mortgage.

These figures are only an illustration. The rate, fees and how much you can borrow depend on the lender and your circumstances.