This guide is general information only, current as at the 'last updated' date above. It is not legal, tax or financial advice and does not take your circumstances into account. Astro Capital Finance provides credit for business purposes only and is not a tax agent, lawyer or financial adviser. Seek advice from a qualified professional before acting. Lending is subject to assessment, security and an acceptable exit strategy.
The short answer
Business bridging finance is a short-term loan, secured by a first mortgage over property, that covers the gap until money arrives from a known future event, usually a sale or refinance. Developers, builders, investors and business owners use it to settle a purchase before selling another asset, release equity from unsold completed stock, hold land before development finance, or fund the business while an asset sale completes.
It is for business purposes only, not for buying a home to live in. The loan is repaid in one go from the planned exit, so lenders focus on the security value and how realistic that exit is.
Common business bridging scenarios
| Scenario | What the loan does | Typical exit |
|---|---|---|
| Settling a purchase before selling another asset | Funds settlement of a new business or investment property while an existing asset is still on the market | Sale of the existing asset |
| Residual stock in a completed development | Releases equity from unsold units or lots to repay the construction lender or fund the next project | Progressive sale of the remaining stock |
| Holding or acquiring land before development finance | Funds the land purchase or carries the site while approvals and development finance are arranged | Refinance to a development or longer-term lender |
| Funding a business while waiting for an asset sale | Provides working capital secured against property until a contracted or planned sale settles | Sale proceeds |
| Finishing a partly built project | Finance to complete the project, secured by first mortgage over the site | Sale or refinance on completion |
General information only. Every loan is subject to assessment of the security, the exit strategy and the borrower’s circumstances.
What is business bridging finance?
Bridging finance covers a timing gap. The borrower knows money is coming, from a property sale, stock sales or a refinance, but needs funds first. The loan is secured over property and repaid in full at the exit.
Under the National Credit Code, credit used predominantly (more than 50%) for business or investment purposes is generally outside the Code. A borrower’s business-purpose declaration creates a presumption that the credit is for business purposes, but that presumption does not apply if the lender or the broker acting for the lender knew or had reason to believe the funds were for personal use. Buying a home to live in falls outside this product. Unfamiliar terms are explained in our glossary.
How is residual stock finance used by developers?
Residual stock is completed but unsold units, townhouses or lots at the end of a development. Construction loans usually fall due at completion, but stock does not always sell on schedule. A residual stock loan secured over the unsold stock refinances the construction lender, giving time to sell at market value rather than discounting to meet a deadline.
Some developers also release equity from unsold stock to fund their next project. Lenders typically require each sale to repay a set portion of the loan, so the debt reduces as stock sells.
Astro provides residual stock finance up to 70% LVR, secured by a registered first mortgage over the completed stock, subject to assessment. The loan is repaid from the sale of the stock or a refinance.
Can a private lender help finish a partly built project?
Yes. Incomplete construction finance is finance to complete a partly built project, secured by first mortgage over the site. It suits developers and builders whose original funding has stalled or run short before completion. It is not finance to fund a build from scratch.
Astro lends up to 75% LVR on residential and 65% on commercial and industrial incomplete construction, subject to assessment. The exit is set at the start: the sale of the completed project or a refinance on completion. Expect the lender to ask for the cost to complete, the building contract and program, and a valuation showing the completed value supports the loan.
Can bridging finance be used to hold or buy land before development finance?
Yes. Developers often secure a site before approvals or construction funding are in place. A bridging loan can fund the purchase or refinance the site in the meantime, with the exit usually a refinance into development finance.
Land is assessed case by case. Lenders look at zoning, the approval pathway, the likely timing of development finance and whether the land value supports the loan on its own.
How is a business bridging loan structured?
Astro’s bridging loans are short-term, business-purpose loans secured by a registered first mortgage, from $50k to $5M, with larger loans considered by exception. Terms run from 1 to 24 months. LVR is up to 75% on metro residential security, while regional, commercial, industrial and land security are assessed case by case.
Depending on the lender, interest on a bridging loan may be capitalised (added to the balance and repaid at the exit) or prepaid (deducted upfront), rather than paid monthly. This frees up cash flow, but the balance at the exit is higher than the amount advanced, so the exit plan must allow for it. Private lending generally costs more than bank lending, so match the term to the realistic exit.
See Business bridging finance for how Astro approaches these loans, or private mortgage finance for an overview of first mortgage lending.
What exit strategies do lenders accept, and what do they assess?
The exit is the core of every application. The two common exits are a sale (of the security, another property or residual stock) and a refinance (to a bank, development lender or other longer-term lender). Lenders assess:
- Valuation: an independent valuation of the security, which sets the LVR.
- Realistic sale price: comparable sales and agent appraisals, not the borrower’s target price.
- Realistic timeline: how long similar property or stock is taking to sell, or how far a refinance has progressed.
- Buffer: room between the expected exit proceeds and the loan balance (including any capitalised interest), in case the price is lower or the sale takes longer.
- The borrower: credit history and overall position, with low-doc and impaired credit considered, subject to assessment.
What are the risks, and how can they be managed?
The main risks are a sale taking longer than planned and the price falling below expectations. Either can mean extending, refinancing or selling for less, and interest keeps accruing during delays.
- Use conservative pricing and selling times, keep a buffer, and choose a term with time to spare.
- Have a back-up exit, such as a refinance if a sale stalls.
- Get advice from your accountant and solicitor before committing, particularly on tax and contract timing.
What documents are needed for a business bridging loan?
A typical application includes:
- Details of the security property, rates notices and any existing loan statements.
- Evidence of the exit: sale contracts, agent appraisals, listing agreements or a refinance letter or application.
- For residual stock: a schedule of unsold stock, list prices, sales history and the construction lender’s payout figure.
- For land: the contract of sale, zoning information and the status of any development application.
- Company or trust details, ABN, and identification for directors and guarantors.
Illustrative example: settling before a sale
Illustrative example only, not a real transaction. A builder has contracted to buy a commercial yard for the business, settling in six weeks. Their investment property is listed but unlikely to sell in time. A bridging loan secured by a first mortgage over the investment property funds the settlement. When the property sells a few months later, the proceeds repay the loan in full, including any capitalised interest.
Astro can provide an approval in as little as 3 hours and settlement in as little as 72 hours, subject to assessment. If a bank has withdrawn at the last minute, see urgent settlement finance. Brokers can visit our brokers page, or contact us on 1300 278 761.
Frequently asked questions
No. Astro lends for business purposes only, meaning more than 50% of the funds must be used for business or commercial purposes. We do not provide owner-occupied home loans or other consumer loans.
Not always. Depending on the lender, interest may be capitalised and repaid at the exit, or prepaid for an agreed period.
You may need to extend, refinance or adjust the price, and interest keeps accruing. That is why lenders look for a realistic timeline and a buffer, and why a back-up exit is worth planning.
No. Astro lends on a registered first mortgage only. We do not offer second mortgages or caveat loans.
Astro lends Australia-wide, excluding the Northern Territory.
This guide is general information only, current as at the 'last updated' date above. It is not legal, tax or financial advice and does not take your circumstances into account. Astro Capital Finance provides credit for business purposes only and is not a tax agent, lawyer or financial adviser. Seek advice from a qualified professional before acting. Lending is subject to assessment, security and an acceptable exit strategy.