Bridging Loans in Australia: What Businesses Should Check Before Settlement

MELBOURNE, Australia — When a business property purchase, acquisition or investment transaction has a firm settlement date but the required funds are not yet available, the timing mismatch can put the deal under pressure. For eligible businesses and investors, bridging finance may provide a short-term funding option while a planned sale, refinance or other repayment event is completed.

Knote, an Australian non-bank commercial lender, provides bridging and gap funding solutions for eligible business, commercial and investment purposes. Its approach focuses on property-backed funding scenarios where the amount required, available security and timing of the transaction need to be assessed together.

What is a bridging loan?

A bridging loan is generally a short-term finance facility intended to cover a temporary funding gap between a current requirement and an expected source of funds or longer-term finance. In a business or property transaction, that gap may arise when settlement is due before a property sale completes, an incoming payment is received, or replacement finance is ready.

Bridging finance is not simply about obtaining money quickly. The proposed facility needs to fit the transaction, the available property security and a realistic repayment plan. If the expected exit is delayed, the borrower may face additional interest, fees or pressure to arrange alternative finance. An extension should never be assumed unless the lender confirms it under the facility terms.

When might a business consider bridging finance?

Several situations can create a temporary funding gap:

Property settlement shortfalls: the available funds fall short of the amount required to complete a purchase on time.
Buying before selling: a business or investor needs to complete a new transaction before funds from an existing property sale become available.
Business or investment transactions: the timing of a purchase or other commercial requirement does not align with the timing of incoming funds.
Development timing gaps: project costs or settlement obligations arise before an expected funding milestone.
Urgent capital requirements: a time-sensitive commercial opportunity requires funding before a longer-term arrangement is in place.

These scenarios do not automatically make a borrower eligible. The purpose of the loan, the property offered as security, the existing debt and the proposed repayment strategy all matter.

What should borrowers assess before applying?

Before committing to bridging finance, businesses should work through five practical questions.

1. How much funding is actually needed?
Calculate the shortfall using the full settlement or transaction requirement, not just the purchase price. Allow for relevant legal, valuation, lender and transaction costs, as well as any contingency that may be needed.

2. What property security is available?
The property’s value, location, type, ownership and existing mortgage obligations can affect whether a proposed facility is suitable. A headline loan-to-value ratio does not, on its own, establish how much a lender will advance.

3. What is the repayment exit?
Identify how the facility is expected to be repaid. Depending on the transaction, this might involve a completed sale, a refinance or identifiable incoming funds. Consider what happens if that event takes longer than expected.

4. What is the total cost?
Review interest, establishment or application fees, legal costs, valuation costs and any account-management or ongoing fees. Compare the expected total cost with the commercial purpose of the funding and the consequences of a delayed exit.

5. Can the facility settle in time?
Ask what documents, valuations, approvals and legal steps remain outstanding. A lender’s indicative decision timeframe is not the same as a guarantee that funds will be available by a particular settlement date.

How does Knote approach bridging and gap funding?

Knote’s published bridging and gap funding information describes short-term facilities for eligible commercial, business and investment scenarios, including settlement shortfalls, purchasing before a sale is completed, development timing gaps and other urgent capital requirements.

The published Knote Bridge™ information outlines indicative loan amounts from $100,000 to $5 million, terms of up to 24 months and maximum loan-to-value ratios of up to 75%–80%, depending on the case. The website also lists an establishment or application fee from 0.55%. These figures are indicative only: actual terms, costs, security requirements and available funding depend on the individual scenario and assessment. They should not be interpreted as a promise of approval or a guaranteed settlement timeframe.

Knote’s funding solutions are intended for business, commercial and investment purposes, rather than consumer lending. Borrowers should confirm that their proposed use of funds fits the relevant product and discuss the specific structure and repayment plan before proceeding.

Businesses considering bridging finance can review Knote’s information at https://www.knote.com.au/bridging-loans/ and its broader services at https://www.knote.com.au/.

Plan the exit before relying on the funds

The key question is not only whether bridging finance can help complete a transaction, but whether the facility can be repaid on a workable timeline and at an acceptable total cost. A clear exit strategy, realistic timing and an understanding of all fees can help business owners assess the risks before signing a facility agreement.

Knote is based in Melbourne and can be contacted on 1300 056 683 or at [email protected] to discuss a potential business or investment funding scenario.

About Knote
Knote is an Australian non-bank commercial lender providing property-backed funding solutions, including bridging and gap funding, second mortgages and short-term caveat finance for eligible business and investment purposes. Product eligibility, lending limits, fees and terms are subject to assessment and applicable conditions.

Media and contact enquiries
Knote Group
Suite 155 / Level 1, 55 Collins Street
Melbourne, VIC 3000, Australia
Phone: 1300 056 683
Email: [email protected]
Website: https://www.knote.com.au/