An office bridging loan is a short-term loan secured by an office property (such as an entire office building, a strata office unit, or any commercial office space) intended to bridge a timing gap in funding. Businesses or investors use it to quickly raise capital – for example, to purchase an office before long-term financing is arranged, or to access equity in an existing office property while awaiting another funding event. Just like other bridging loans, it’s typically for a term of a few months up to a year, and is repaid once a more permanent solution (like a commercial mortgage or the sale of a property) is in place. In summary, it “bridges” the gap when immediate cash is needed for an office real estate transaction or expense, and it is secured against the office property’s value.
Both companies and individuals can apply, depending on ownership of the office. Many office properties are owned by companies (for instance, a business owning its premises or an investment firm owning an office building), and lenders are accustomed to lending to corporate entities for bridging purposes . The applicant will need to be either the current owner of the office property or in the process of purchasing it. As with other private bridging loans, the borrower should qualify as an Accredited Investor if dealing with a private lender (this could be the individual behind the company or the company shareholders). There’s generally no strict requirement on operating history or profit of the company, because the loan underwriting is focused on the property collateral rather than the company’s cash flow. This means even if your business has limited financial statements or is a newly set-up SPV for the property, you may still secure a bridge loan, so long as the office property has sufficient value and you have a viable exit strategy for repayment.
If your business needs to move quickly on a prime office space – for example, a floor in a building that became available at a favorable price – a bridging loan can provide the funds to purchase or lease (with purchase obligation) that space immediately . This is crucial because commercial real estate deals often have tight deadlines or competing bids. Similarly, if you’re relocating your office, you may need to pay for the new premises before you’ve released your old one (if owned) or before your old lease ends – bridging finance can cover the overlap so your operations aren’t disrupted. Another scenario: if you plan to buy and renovate an older office property to use or rent out, a bridge loan can fund the purchase and even the refurbishment costs quickly, allowing you to upgrade the space . Once the property is ready and possibly generating rental income, you could then refinance with a standard commercial property loan. Essentially, the bridging loan gives your business agility: you can seize opportunities or make transitions without waiting for lengthy bank loan approvals or needing to liquidate assets at an inopportune time.
You can generally borrow up to around 70% of the office property’s market value (this is the LTV) with a bridging loan . The exact amount will depend on the property type (freehold offices might get higher LTV than leasehold ones approaching lease expiry), location, and the strength of your exit plan. Loan sizes start at roughly S$1M, and can go quite high – for large office buildings or portfolios, bridging facilities of S$20-50M or more can be arranged if the collateral supports it. Many providers have no hard maximum, as they can syndicate funds for bigger deals . For example, if your company is buying an office property worth S$10 million, a bridge lender might extend around S$7 million (70%) short-term financing. If you needed more than that (say to cover GST on the purchase or renovation costs), you might need to pledge additional collateral or accept a lower LTV on the overall package. Remember that any existing mortgage on the office would factor in – typically the bridging loan would be used to pay off any existing loan first (becoming the primary lien), or the existing lender’s consent would be needed if it’s a second-charge loan (which is less common).
Interest rates for bridging loans on offices are comparable to other bridging finance rates, usually in the ballpark of 0.5% to 0.9% per month (roughly 6-10% per annum, though it can vary). The rate depends on the loan-to-value, loan amount, and perceived risk. If the office property is in a prime district and you’re borrowing a moderate LTV, you might get the lower end of that range. If it’s a specialized property or higher risk, the rate might be on the higher side. Banks generally don’t have a specific bridging product for offices – they might offer an overdraft or short-term credit line at varying rates – so private bridging lenders set the market rate. It’s important to note that these loans are interest-only in most cases, so you’ll be paying interest each month (or some lenders allow interest to roll-up and be paid at the end, depending on the structure). For example, a S$5 million office bridging loan at 0.7% per month would incur S$35,000 in interest each month. There may also be an arrangement fee (often 1-2% of the loan amount) and legal fees to account for. While the cost is higher than long-term loan interest, businesses often justify it by the opportunity gain – e.g., securing a property that will appreciate or avoiding downtime in moving offices – making the short-term expense worthwhile.
Very quickly – one of the main advantages of bridging finance is speed. Upon contacting a lender or broker, you might receive an in-principle approval in as little as 24 hours, given that the crucial information (property details, estimated value, and your exit plan) is provided . The formal approval and funding typically take a few days to a couple of weeks, mostly due to legal documentation (title search, preparation of the charge documents, etc.). For urgent cases, some lenders have expedited processes where funds can be released in under a week from initial application. If, for instance, you need to exercise an Option to Purchase on an office unit that expires in 14 days, a bridging loan can be timed to provide the cash by then, whereas a conventional loan might not. To speed up the process, ensure you have the necessary corporate resolutions (if borrowing via a company), identification of directors/owners, and the Option to Purchase or sale contract ready. Engaging a solicitor who is familiar with commercial property bridging can also help streamline the paperwork.
Your company can be the borrower if it is the entity purchasing or owning the office property. Bridging lenders often lend to SPVs (special purpose vehicles) or companies set up for property deals. In that case, the loan agreement will be with the company, and the company will mortgage the property as collateral. However, most lenders will require personal guarantees from the company’s directors or shareholders, especially if it’s a small or newly formed company. This is to ensure that the individuals behind the company stand behind the loan obligations. If you prefer to borrow personally (for example, you’re a sole proprietor buying the office in your own name), that’s also possible – the loan can be in an individual’s name as long as the property’s title is in that name. There might be considerations like stamp duty (if transferring property to a company vs individual) that you’ll take into account separately. But from a loan perspective, bridging providers are flexible: they can lend to individuals, corporations, trusts, etc., as long as the legal owner of the property agrees to the charge and the ultimate obligor meets the Accredited Investor criteria. You should choose the borrowing structure that aligns with how the property is held and your long-term plans (some prefer to hold commercial property in a company for tax or ownership reasons).
Typically not in detail. One big difference between bridging loans and traditional loans is the underwriting focus. A bank, for a commercial property loan, would ask for your company’s financial statements, profits, cash flow projections, and will calculate ratios to ensure the company can service the debt. A bridging lender, on the other hand, is more concerned with the collateral (the office property value) and the exit strategy. They might inquire generally about your company’s business or how you intend to service the interest during the loan period, but it’s unlikely they’ll require audited financials or detailed cash flow analysis as a condition. Many bridging loans have interest reserve accounts or interest roll-up features, meaning the interest cost is accounted for within the loan or separately, reducing reliance on your ongoing cash flow. That said, if your company does have strong financials, it doesn’t hurt to share that as it can only give the lender more confidence (and possibly slightly better terms). But if it doesn’t, that’s exactly why bridging loans are useful – they provide funding based on assets when conventional credit metrics are a hurdle.
The exit strategy is usually either refinancing with a long-term commercial mortgage or selling the office property, similar to other real estate bridging loans. If you took the bridging loan to acquire an office, you might concurrently be applying for a standard mortgage with a bank – once that is approved and ready, those funds will pay off the bridging loan. Sometimes businesses plan to sell another asset (like another property or part of their portfolio) to raise the cash – that sale, when completed, provides the payoff. In some cases, if the bridging loan was for a quick capital need, the exit could even be that the company’s cash flow recovers or a client payment comes in, allowing the loan to be cleared. The lender will want to know your intended exit at the time of application. For example, you might say, “Our exit is refinancing: we have applied to Bank ABC for a term loan of X amount, and bridging is to carry us through until that is disbursed,” or “Our exit is sale: we are in the process of selling another property/asset due to complete in 6 months.” Having a believable and well-timed exit plan is crucial; it assures the lender and also ensures you don’t pay bridging interest longer than necessary. If your exit is refinancing, a tip is to start the process with the bank early and perhaps secure an offer letter, so you have certainty. If it’s a sale, allow some buffer time in case of delays.
A few considerations: if the office property is part of a larger development (say an office condo or strata office in a building), ensure the lender is comfortable with that type – most are, but some have preferences (for example, they might favor full office buildings over single strata units if the latter are small). Leasehold tenure is another: many offices in Singapore are on 99-year land, so if the lease is significantly depleted (e.g., 30 years left), it could affect the LTV or willingness of lenders. Another consideration is whether the property is owner-occupied or tenanted – not critical for the loan approval, but if owner-occupied, the lender knows your business is relying on it; if tenanted, it’s purely an investment. This might influence how you plan your exit (owner-occupiers often refinance, while pure investors might flip or refinance based on rental income). Also, if the bridging loan is to facilitate a move, plan the logistics so that the bridging timeline covers any unexpected delays in moving or selling your old office. Lastly, remember that bridging loans are a means to an end; for an office, you should concurrently work on the permanent financing or other outcome because commercial refinancing can sometimes take a bit longer to finalize than residential. Keep your bridging lender updated on significant developments – for instance, if you’ve secured the long-term loan approval – as this can make extension or any adjustments smoother if needed. Overall, bridging loans are quite straightforward for office properties, as they’re a common asset class; just be mindful of the lease tenure and exit timeline in your strategy.
