Bridging loans to buy premises or a business before you sell

Good premises rarely wait for you. The factory next door comes up, the shop on the corner with the right foot traffic hits the market, or a competitor decides to sell their business — and the timing has nothing to do with when your own property sells or when your bank finishes its paperwork. A bridging loan for business is how owners say yes now and sort the long-term funding afterwards.

Can you buy business premises before you sell your current ones?

Yes. A short-term lender funds the purchase, or the part your bank can’t fund in time, using property as security. Once your existing premises sell, or your long-term bank loan is ready, the bridge is repaid in one go.

The loan is:

• secured over residential or commercial property — the premises you’re selling, the ones you’re buying, your home, or a combination;
• from $20,000 to $5,000,000;
• written as a first mortgage, a second mortgage or, for Victorian property, a caveat loan;
• short-term — counted in months, with the exit agreed before settlement.

It’s the same tool whether you’re upgrading premises, moving from leasing to owning, or buying an operating business.

Which bridge fits your purchase?

Most purchase bridges fall into one of four patterns. Working out which one you’re in tells you how much needs bridging and what the security looks like.

Your situation	What gets bridged	Typical security
Bank will fund the purchase but not before the deposit is due	The deposit only	Second mortgage (or Victorian caveat) over your home or current premises
Bank approval won’t arrive before settlement	The full purchase, until the bank funds	First mortgage over the new premises, sometimes plus another property
Buying new premises, current premises still to sell	Purchase price and costs, until the sale settles	Mortgages over both old and new premises
Buying an operating business	Deposit, settlement sum or working capital	Property equity — home, investment or commercial

If none of these fits neatly, the short-term bridging finance page covers the wider range of gaps a bridge can close.

What changes when you’re buying a business rather than a building?

The loan structure is the same — it’s still secured against property — but the deadline and the paperwork are different. Business sale contracts often set tight dates for deposits and completion, and a bank may want months of trading history under the new owner before it commits.

business.gov.au’s checklist for buying an existing business is a sensible companion here. It recommends reviewing several years of financial records, licences and permits, equipment, stock, outstanding debts and lease agreements, including whether the landlord’s consent is needed. Lenders appreciate seeing that work done — it shows the purchase is sound and the exit is realistic. Our buying a business scenario walks through a typical deal.

Have a contract and a deadline? Run your purchase past us — it takes about a minute.

What costs should you build into the bridge?

The bridge needs to cover more than the price. Before settling on an amount, add up:

• the purchase balance — price less any deposit you’re funding yourself;
• transfer (stamp) duty — payable when you buy property, under each state’s own rules; Victoria’s State Revenue Office explains its version;
• legal and conveyancing costs on both the purchase and the loan;
• valuation fees for each property offered as security;
• loan costs such as establishment fees and any interest that’s prepaid or added to the loan;
• a buffer, because settlements slip and sale prices move.

Underestimating these is the most common reason a purchase bridge needs topping up later. Size it right the first time.

A worked example of a premises bridge

Illustrative only. Round numbers, an invented business, and no rates.

A printing business in Dandenong has found a larger factory for $1,500,000, with settlement in 45 days. Its current factory, worth about $1,000,000, is owned outright and has just been listed. The owners have $200,000 of their own cash for the deposit and costs.

• Amount to bridge: the remaining purchase price plus duty and costs — about $1,450,000.
• Security: a first mortgage over both factories, worth $2,500,000 together.
• LVR during the bridge: $1,450,000 ÷ $2,500,000 ≈ 58%.
• Exit: the old factory sells; its proceeds pay the bridge down to roughly $450,000, which is then refinanced to a bank as an ordinary commercial loan on the new premises, or repaid from trading.

Because both properties are in Victoria, part of the bridge could have been done as a caveat loan. Had they been in Parramatta or Ipswich, registered mortgages would have done the whole job on a comparable timeline. Check what your own equity supports with the borrowing calculator, and see our notes on commercial and industrial property as security.

How fast can a business bridging loan settle?

Purchase bridges are often larger, so the realistic target is up to $5m possible within 24–48 hours once the valuation, contract and documents are in place; smaller deposit bridges of $20k to $250k can be possible the same day. What makes the difference is giving us the contract of sale, the settlement date, details of any bank approval and the listing or sale contract for the property you’re selling — all at the start.

If the new premises will be your security and the current loan has to go, a short-term first mortgage is often the structure that pays the bank out and funds the purchase together.

Buying first? Let’s check you qualify

The right premises or business won’t always wait for your sale or your bank. A short-term bridge can hold the deal together while the long-term pieces fall into place.

It takes roughly 60 seconds to tell us what you’re buying and what you own. We don’t run a credit check when you first enquire, and we don’t fire your details off to every lender in the country. A real person looks at your purchase, your security and your settlement date, then calls you to talk through the options. Please fill in the form carefully — particularly the property you’re offering, the state it’s in and the date settlement is due — so we can set up the right bridge first time.

See if my purchase can be bridged →