Deals rarely line up neatly. The new premises need to settle before the old ones sell. The bank says yes to the refinance but can't settle for six weeks. A buyer for your business wants to complete, but not until after the financial year. Business bridging finance fills that gap. fundU lends $20,000 to $1m to New Zealand businesses as bridging finance, secured on property and repaid when the money you're waiting on arrives.
We're a direct lender, so our own credit team makes the call. That means we can move at the pace a live deal demands and look at the whole picture, not just a set of accounts.
What is bridging finance for a business?
Bridging finance is a short-term loan that "bridges" the gap between a payment you need to make now and money you're confident will arrive later. For a business, the money arriving later is usually a property sale, a refinance, the sale of a business or asset, or a large contract payment.
What sets bridging finance apart from other short-term borrowing is how closely it's tied to one event. The loan exists because of that event, and it's repaid when that event happens. Our short term business loans cover broader timing gaps, while bridging finance is about getting from one side of a specific transaction to the other.
Banks can offer bridging, but for businesses it's often hard to get in time. The application may need current financial statements, the bank may want the sale to be unconditional first, and credit decisions can take weeks. A private lender that focuses on the property and the exit can often give a clear answer within days.
When do New Zealand businesses use bridging finance?
Bridging finance works best when the exit is identifiable and reasonably certain. Common situations we see:
- Moving premises. A Canterbury manufacturer buys a bigger factory before its current unit sells.
- Settlement mismatch. Your purchase settles on the 1st, but the sale of another property doesn't settle until the 30th.
- Delayed bank refinance. The bank is on board, but its approval, valuation or documents are running behind your deadline.
- Selling a business or division. You've got a buyer and a timeline, but need funds before the sale proceeds land.
- Auction or tender purchases. Business premises bought at auction must settle on a fixed date, often before permanent funding can be arranged.
- Development or subdivision sales. A builder has sections or units under contract and needs funds until settlements come through, secured on conventional property.
If you're a builder or developer, our property developer and builder loans page explains how we lend against conventional property rather than the project itself.
What's the difference between open and closed bridging?
The difference comes down to how certain the exit is. Closed bridging has a fixed exit date. Open bridging has a clear plan but no confirmed date yet.
| Closed bridging | Open bridging | |
|---|---|---|
| Exit status | Unconditional sale or confirmed refinance | Property listed, refinance in progress or sale still being negotiated |
| Exit date | Known | Estimated |
| What we look for | The signed agreement and settlement date | A realistic timeframe, a fair price expectation and a fallback plan |
| Equity required | Usually less | Usually more, to cover a longer or lower sale |
| Typical use | Buying before an unconditional sale settles | Buying before you've found a buyer |
Both can work. With open bridging, we'll want to talk about what happens if the sale takes longer or achieves a lower price than you hope. That isn't pessimism. It's what makes the plan robust enough for us to lend on quickly.
How does bridging finance work in practice?
We lend against property with enough equity, set the term around the expected exit and agree a repayment structure that doesn't burden you while you wait.
- We identify the security. This might be the property being sold, your home, a rental or another property owned by you, your company, your family trust or a supporting party.
- We confirm the exit. A sale agreement, a bank's letter of offer, a sale and purchase agreement for the business, or a solid plan to sell.
- We size the loan. Based on property value, existing debt and how confident the exit is, within our $20,000 to $1m range.
- We agree the structure. Commonly capitalised interest, so there are no monthly repayments during the term.
- Lawyers complete the documents. Your lawyer and ours handle the mortgage documents and settlement.
- The exit repays the loan. When the sale or refinance settles, your lawyer repays us directly from the proceeds.
Bridging finance is only as good as its exit. The more evidence you can show that the sale, refinance or payment will happen, the faster and more comfortable the decision.
Can I keep my bank loan while bridging?
Often, yes. If your bank mortgage is staying in place, we can lend on a second mortgage behind it. If you're selling the property that the bank has security over, the bank usually gets paid out on settlement and our loan is repaid alongside it.
In other cases it makes more sense for fundU to take a first mortgage, particularly when the property is unencumbered or when the bank is being replaced anyway. Our fast first mortgages page explains how that works.
How are bridging loans repaid?
Almost always in one lump sum, from the event the loan was bridging. Monthly repayments are optional, not automatic.
- Capitalised interest means no scheduled monthly repayments during the term. Interest is added to the loan and repaid with the principal at the end. This is the most common structure for bridging because the business can keep its cash for the move, the purchase or trading.
- Interest-only suits owners with steady income who prefer to keep the balance flat.
- Principal and interest is available where part of the loan will be repaid from cash flow.
Because the whole loan is repaid from a sale or refinance, it's important to allow for everything else that comes out of the proceeds: the first mortgage, agent's commission, legal costs and any GST considerations on commercial property. Your accountant and lawyer can confirm those numbers so the plan adds up.
What if the sale or refinance takes longer than planned?
Talk to us as soon as you know. Delays are common with bridging, and the earlier we hear about one, the more options there usually are.
Sales slip for all sorts of reasons: a buyer's finance falls through, a building report raises questions, the market goes quiet over winter or the holidays. Refinances slip when a bank asks for more information or a valuation comes in lower than expected. None of these are unusual, and a well-planned bridging loan allows for some of them from the start.
When we set up the loan, we'll talk through a few "what ifs" with you:
- What price would you accept if the property needed to sell faster?
- Is there another asset that could be sold or refinanced as a fallback?
- Could trading cash flow cover interest for a period if needed?
- Is the term long enough to cover a failed first sale and a relisting?
Because fundU makes its own lending decisions, you're dealing directly with the people who can look at a revised plan. You won't be passed through a call centre while the clock runs down.
Example scenario
A Tauranga freight company needed a larger yard near the port. A suitable industrial site came up for $1.4m with a six-week settlement, and the company's bank agreed to fund most of the purchase. The shortfall was about $400,000, which the directors planned to cover by selling their existing smaller yard, valued at around $900,000 and already listed.
The existing yard wouldn't sell in time. fundU lent $400,000 on a second mortgage over the existing yard, behind the bank, with capitalised interest. The new site settled on time, the company moved, and when the old yard sold four months later the bridging loan was repaid from the proceeds.
What you'll need
To get started, pull together:
- Details of the transaction you're bridging, such as the purchase, sale or refinance
- The property offered as security, who owns it, a rough value and what's owed on it
- Evidence of the exit, like a sale agreement, a bank's letter of offer, a listing agreement or an appraisal
- Key dates, including when you need the funds and when the exit is expected
- Your business name and NZBN or company details
- A fallback plan if the exit takes longer than expected
We don't need financial statements or tax returns for the initial assessment. For a deeper look at how bridging works, read our guide to bridging finance explained.
Need to bridge a gap?
If a sale, refinance or payment is on its way but your deadline is sooner, business bridging finance from fundU can keep the deal alive. Tell us the dates and the property, and a lending specialist will call you back to talk through the options.
Enquiring is free and doesn't affect your credit score. Phone 09 875 4577 or see if you qualify in a couple of minutes.
Frequently asked questions
What is business bridging finance?
Business bridging finance is a short-term loan that covers the gap between when a business needs money and when it expects to receive it, typically from a property sale, a refinance or a large payment. fundU secures bridging loans on New Zealand property and sets the term around that expected exit.
What is the difference between open and closed bridging finance?
Closed bridging finance is used when the exit is already locked in, such as an unconditional sale agreement with a settlement date. Open bridging finance is used when there's a clear plan but no fixed date yet, such as a property that's listed but not sold. Open bridging usually needs more equity and a stronger fallback plan.
Do I have to make monthly repayments on a bridging loan?
Often not. fundU can structure business bridging finance with capitalised interest, meaning there are no scheduled monthly repayments during the term and the interest is paid when the loan is repaid from the sale or refinance. Interest-only and principal and interest structures are also available, depending on the approved terms.
Can bridging finance help if my bank refinance is delayed?
Yes. If a bank has indicated it will lend but its approval or settlement won't happen in time, fundU can bridge the gap on the strength of your property and the expected refinance. When the bank loan settles, it repays the bridging loan. We'll want to understand how firm the bank's position is.
Can I use bridging finance to buy new business premises before selling the old ones?
Yes, that's one of the most common uses. fundU can lend against your existing premises, your home or another property so you can settle on the new site, then the bridging loan is repaid when the old property sells. The amount depends on the equity available across the security.
What security is needed for a business bridging loan?
New Zealand real estate with enough equity, such as residential, commercial or industrial property, and some land case by case. The security can be owned by you, your company, your family trust or a supporting party. fundU can lend on a first mortgage or a second mortgage behind your existing bank loan.
A practical next step
Ready to see what's possible?
Tell us what the business needs, when you need it and what property is available. A fundU lending specialist will call you back to talk it through — enquiring is free and won't affect your credit score.