Small and medium-sized enterprises (SMEs) make up 99% of all businesses in the Philippines. Yet they face a funding shortfall of $221 billion (₱12.82 trillion), making it one of the most significant gaps in the Asia-Pacific region. With only $15 billion (₱870 billion) available through formal SME credit channels, many business owners are left struggling to manage cash flow disruptions or capitalize on time-sensitive growth opportunities.
In such situations, bridging loans can serve as a fast, short-term financing solution, providing quick access to capital when it's needed most. These loans help limited companies manage short-term gaps like delayed funding or deal closures by covering urgent expenses.
In this article, you’ll discover how bridging loans for limited company can support cash flow, cover urgent costs, and maintain business continuity during funding delays.
Key Takeaways
- Bridging loans provide limited companies in the Philippines fast, short-term funding for asset purchases or urgent cash flow needs.
- Loans are secured against company assets, meaning the lender can claim them if unpaid—and require a defined repayment strategy.
- Repayment typically comes from asset sales, refinancing, or incoming revenue timed to match the loan term.
- Used wisely, they offer speed and flexibility; misused, they carry risks like high interest costs and potential asset loss.
- Lenders like n90 specialize in quick approvals and custom solutions for SMEs needing accessible, secured finance.
What is a Bridging Loan for a Limited Company?
A Bridging Loan for a Limited Company is a short-term, secured loan designed to provide quick access to funds, usually secured against property or other business assets. It "bridges" the gap between your immediate cash needs and longer-term financing solutions or other incoming funds. These loans provide fast capital for limited companies to fund property purchases, renovations, expansion, or bridge short-term cash flow gaps during urgent business situations.
The following are a few key characteristics of bridging loans for limited companies:
- Short-term duration: Typically from 3 months up to 18-24 months.
- Security: Loans are secured against company assets like commercial property, land, or other valuable assets.
- Flexible use: Funds can be used for property purchases, renovations, stocking inventory, business acquisitions, or unexpected costs.
- Fast funding: Bridging loans can often be organized in days, much faster than traditional loans or commercial mortgages.
- Exit strategy: Repayment plans usually involve refinancing, asset sales, or incoming funds; a well-defined exit strategy reduces default risk and protects company assets.
For limited companies, bridging loans are assessed primarily based on the value of assets offered as security. Lenders also place strong emphasis on the exit strategy rather than trading history or credit score, making these loans accessible even to newer businesses or those under financial strain.
Now that we’ve clearly understood what a bridging loan for a limited company is, let’s explore its types and how each suits specific short-term business needs.
Types of Bridging Loans Available for a Limited Company
Bridging loans come in various types, each designed for specific business needs. For limited companies, the loan type depends on factors like transaction nature, urgency, repayment plan, and available assets. Understanding these options helps businesses make informed decisions and avoid unnecessary delays.
Here are the main types of bridging loans typically available to limited companies:
1. Closed Bridging Loan
A closed bridging loan has a fixed repayment date agreed at the start. It’s based on a guaranteed exit strategy, such as a confirmed property sale or incoming funds. Since repayment is assured, lenders typically offer better terms and lower risk pricing.
Best For: Businesses with legally confirmed exit strategies and fixed timelines.
Example: A company that is due to receive funds from a signed asset sale in 60 days uses a closed bridge loan to access working capital upfront.
2. Open Bridging Loan
An open bridging loan does not have a fixed repayment date, but repayment is typically expected within 6 to 12 months. These loans are suited for situations where the exit strategy is still being finalized or the timeline is uncertain. Lenders may charge slightly higher interest due to the increased risk.
Best For: Businesses facing delays in asset sales, approvals, or refinancing but still requiring immediate access to capital.
Example: A developer awaiting planning permission uses an open bridging loan to secure land, planning to repay once approvals are granted or funding is arranged.
3. First Charge Bridging Loan
A first charge bridging loan gives the lender primary security over the pledged asset, ensuring they have priority over other creditors in case of default. This type of loan typically offers higher borrowing limits since the lender holds the most substantial claim on the asset.
Best For: Companies seeking maximum loan amounts who have assets free from existing charges or loans.
Example: A company uses an unencumbered warehouse as collateral to obtain a first-charge bridging loan with priority over any future lenders.
4. Second Charge Bridging Loan
A second charge bridging loan is secured against an asset that already has a primary mortgage or loan, placing the lender in a secondary position behind the first creditor. This means the second lender is repaid only after the first charge is settled in case of default.
Best For: Companies that have an existing loan on a property but require extra funds without refinancing the first loan.
Example: A limited company takes a second-charge bridging loan on an office building that is already under mortgage to access additional capital.
5. Development Bridging Loan
A development bridging loan provides short-term financing to cover costs related to property refurbishment, construction, or land development. It bridges the gap until longer-term development funding becomes available.
Best For: Property developers needing immediate capital to start site preparation or initial works before securing a full construction loan.
Example: A company uses a development bridging loan to begin site clearance and groundwork while awaiting approval of their long-term construction financing.
Now that we know the types of loans available, let’s move to how the process works, especially for limited companies in the Philippines.
How Bridging Loans Work for Limited Companies?
Bridging loans for limited company are designed to offer fast and flexible financing based on either secured collateral or projected cash inflows. The application process is more agile than traditional loans and can result in funding within 3–7 working days, depending on the lender and documentation.
Here’s how the process generally works:
1. Application and Approval
The limited company submits a loan application with details of the asset to be used as security, the loan amount, and the intended use of funds. Lenders usually prioritize speed and flexibility, often completing approvals within days by reviewing submitted asset valuations, financial statements, and a clear business or exit plan.
2. Valuation and Security
The lender conducts a valuation of the asset securing the loan to determine the maximum loan-to-value (LTV) ratio, which typically ranges between 60% and 75%. However, this percentage can vary depending on the lender’s policies and the type or condition of the asset. The company then grants a legal charge or mortgage against the asset as security.
3. Loan Disbursement
Once approved, funds are released quickly, often within 3 to 10 working days, providing the company with immediate liquidity. The loan amount is typically transferred to the company’s account, enabling it to proceed with the intended transaction without delay.
4. Interest and Fees
Interest rates on bridging loans are typically higher than standard loans because lenders take on greater short-term risk and must provide funds quickly. Interest may be rolled up (added to the principal, increasing the total repayable amount) or paid monthly to help manage cash flow, depending on the agreement. Additional charges may include arrangement fees, valuation costs, and legal expenses, all of which should be factored into the total loan cost.
5. Repayment and Flexibility
Bridging loans are typically repaid in full at the end of the term, using methods such as refinancing, the sale of the secured asset, or incoming business revenue. The choice of repayment strategy depends on the company’s projected cash flow, asset liquidity, and market timing. This flexibility allows businesses to align repayments with their exit plan, but poor planning or delays in execution can lead to default risks or forced asset sales.
Lenders like n90 simplify bridging finance for limited companies by offering a fast, streamlined 3-step process: submit your documents, meet the team, and receive funds directly into your business account. To be eligible, your company must have an annual revenue of at least ₱25 million.
Example: Let’s say a logistics company in Metro Manila wins a large delivery contract but lacks the trucks to fulfill it. While waiting for the client’s initial payment, the company uses a bridging loan for a limited company to purchase two delivery vans. Within 45 days, when the client’s payment is received, the loan is cleared, ensuring the project moves forward without disruption.
Now that we understand how the loan is processed, let's look at where bridging loans are most commonly applied in business operations.
Common Uses of Bridging Loans for Limited Companies
The real strength of bridging loans for limited company lies in their versatility and ability to provide quick funding that meets urgent business needs. This flexibility makes them ideal for a wide range of financial challenges.
Here are the most common and practical use cases:
- Property Transactions: To quickly buy commercial land or office space when immediate payment is required, often before selling an existing property or securing a traditional mortgage.
- Inventory Procurement: To rapidly purchase raw materials or stock during periods of favorable pricing or seasonal demand spikes, ensuring uninterrupted production or sales.
- Project Mobilization: To finance initial expenses like labor, equipment, and materials in construction, logistics, or engineering projects before client payments begin.
- Bid Bond Financing: To fund bid bonds and related upfront costs that allow companies to participate in tenders while awaiting project approval.
- Bridging Cash Flow Gaps: To cover operational expenses when client invoices are outstanding, preventing disruptions in day-to-day business activities.
- Business Expansion and Transitions: To finance mergers, acquisitions, or expansions that require immediate capital while long-term funding is arranged.
With these use cases in mind, let’s move on to explore the actual benefits bridging loans offer to limited companies that use them responsibly.
Key Benefits for Limited Companies
When used correctly, bridging loans provide limited companies with strategic financial advantages that extend beyond simple emergency funding. Here are a few key benefits:
- Fast Approval and Access to Funds: Lenders often approve loans within days, enabling companies to quickly capitalize on urgent opportunities or manage unforeseen disruptions without cash flow delays.
- Diverse Collateral Options: Loans can be secured against property, vehicles, equipment, or receivables, enabling asset-light companies to qualify.
- Repayment Aligned with Cash Flow: Flexible loan terms allow repayment schedules to match expected income streams, easing pressure on working capital.
- Enhanced Operational Liquidity: Bridging finance injects funds exactly when needed, ensuring smooth day-to-day operations and maintaining supplier and customer confidence.
- Support for Time-Sensitive Growth: Enables companies to swiftly pursue limited-window opportunities like tenders, acquisitions, or market expansions that require immediate capital.
While the advantages are clear, limited companies must also be aware of the potential risks associated with short-term financing.
Risks and Considerations
While bridging loans offer fast access to capital, they also come with significant financial responsibilities. If not managed properly, they can quickly lead to cash flow strain or long-term debt issues. To ensure the loan aligns with your business objectives, it’s crucial to assess the following risks carefully:
- High Interest Costs: Interest rates are significantly higher than traditional loans due to the short-term risk and speed of funding.
- Tight Repayment Deadlines: Most loans must be repaid within 6 to 12 months, making a clear and reliable exit strategy essential from the outset.
- Asset Security Risk: Failure to repay can result in the loss of secured assets such as property, equipment, or receivables.
- Potential Debt Dependence: Repeated reliance on bridging finance instead of sound cash flow management can lead to a cycle of short-term borrowing and mounting debt.
Therefore, it’s crucial for any limited company considering this route to evaluate repayment certainty and explore lender transparency.
How n90 Supports Limited Companies with Bridging Loans?
Limited companies often face delays in receivables, uneven cash flow, and limited access to formal credit. Traditional lenders require lengthy paperwork, collateral, and slow approvals, making it difficult to respond to urgent funding needs or short-term business opportunities.
We at n90 offer a solution to these challenges by providing flexible and accessible financing options designed to fit your business needs. These include bridging loans for limited company, small business loans, and invoice factoring. With clear terms and no hidden fees, we’re committed to delivering financing that aligns with your business size and cash flow requirements.
Here’s what we offer to address the critical financial needs of limited companies:
- Bridge Loans: Specifically designed to close short-term cash flow gaps, allowing you to seize immediate opportunities or manage transitions, much like the closed bridging loans discussed earlier.
- Small Business Loans: Flexible financing options for broader business needs, including expansion, inventory, or operational cash flow.
- Invoice Financing: A practical solution to get liquidity from your accounts receivable, providing a continuous line of credit.
n90 primarily serves enterprises with varying annual revenues and provides credit limits based on your business size:
- Above ₱150 million: Credit limits up to ₱25 million with rates below 1% monthly.
- Between ₱15 million and ₱150 million: Credit limits from ₱1 million to ₱10 million at monthly rates of 1.09%–1.49%.
- Below ₱15 million: Credit limits up to ₱1.5 million with rates ranging from 1.50% to 1.90%.
To qualify, your business must be registered with the Bureau of Internal Revenue and either the DTI (for sole proprietorships) or the SEC (for partnerships or corporations). We pride ourselves on a relationship-based approach, offering clarity, speed, and financing designed for real business challenges.
Final Words!
Bridging loans for limited company provide quick, short-term funding to cover cash flow gaps, buy inventory, or handle urgent business expenses. With minimal paperwork, fast approval, and no long-term commitments, they enable limited companies in the Philippines to act without delay.
But securing the right financing partner is key to ensuring everything goes smoothly. That’s where n90 can make a difference. Offering collateral-free bridging loans and expert financial guidance, n90 helps you make informed decisions every step of the way. With customized solutions designed to meet your business needs, n90 is here to support you in securing the funding you need.
Get in touch with n90 for a transparent and professional approach to bridging loans that align with your business objectives.
FAQs
1. Will taking a bridging loan affect my company’s credit rating?
Yes, like any business credit product, a bridging loan can influence your company’s credit standing. Timely repayments can strengthen your credit profile and improve future borrowing capacity. However, defaults or delays may negatively impact your credit score and financing eligibility.
2. Can a limited company with poor credit still get a bridging loan?
Yes, though approval depends on the lender's criteria. Some lenders focus more on collateral, receivables, or projected cash flow than credit history alone. However, poor credit may result in higher interest rates or stricter terms, such as personal guarantees or upfront fees.
3. Do bridging loans require collateral for limited companies?
Not always. While many bridging loans are secured against property or equipment, some lenders offer unsecured options based on revenue or invoices. Still, secured loans typically offer better terms, including lower rates and higher approval chances.
4. Can bridging loans be used for tax payments or government dues?
Yes, many businesses use bridging loans to pay urgent liabilities like VAT, income tax, or customs duties. This helps avoid penalties or business disruptions. Lenders may require proof of tax obligations and a clear repayment plan tied to incoming revenue.
5. Can bridging loans be used alongside other financing options like lines of credit?
Yes, bridging loans can complement other credit facilities if your repayment strategy is well-defined. However, managing multiple financing tools requires disciplined cash flow management to avoid overleveraging or repayment conflicts with other creditors.
