Bridging finance for small developers

The fast track to funding your next build

Bridging finance has moved from niche to mainstream for small UK developers. In 2024, bridging volumes reached a record £7.34bn, up from £5.76bn the year before. By late 2024, quarterly completions accelerated by nearly a third, and forecasts suggest the market could grow to as much as £12.2bn in 2025. The momentum is not accidental. Developers want speed, flexibility, and higher leverage - and bridging delivers all three.

Rates have eased too. Average pricing around mid-2025 is reported at approximately 0.81% per month, reflecting greater lender appetite for development risk and ongoing housing demand across Great Britain. For smaller developers juggling multiple sites, that reduction matters. Lower monthly costs and the ability to unlock equity can keep programmes moving without waiting for sales or long-term finance to complete.

Bridging can release funds in as little as 48 hours, especially for time-sensitive land acquisitions, auction purchases, or non-standard builds that traditional lenders avoid. With up to 75% loan-to-gross development value and flexible drawdowns, it can cover land buys, cost overruns, conversions, and phased construction. There are options from as little as £5,000 with no formal upper limit, secured against property or other assets. Terms usually run from a few weeks to around a year.

Understanding APR is not just about percentages - it is about knowing what you will pay in real terms. We break it down so you can make informed decisions.

The principle is simple. Use short-term funding to acquire, refurbish, or build, then exit via sale or refinance into longer-term development or investment finance. Done well, it keeps your pipeline active, makes best use of your equity, and helps you compete for opportunities others cannot move on fast enough.

Looking ahead, the data shows a market built on speed and optionality. If you are preparing to scale, now is the time to understand your bridging toolkit and how to deploy it with confidence.

Is this the right fit for you?

If you are a small developer operating in England, Scotland, or Wales, bridging finance could suit you when timing is critical. It works for site acquisitions, auction purchases, heavy or light refurbishments, and projects where planning, construction method, or mixed-use elements do not fit a mainstream mortgage. It can also release equity from existing assets to fund the next site without waiting for sales to complete.

You will need a clear exit strategy - typically sale or refinance into development or buy-to-let finance - along with a realistic programme and cost plan. If your project involves non-standard construction or staged milestones, bridging can be structured with drawdowns to match your build. If you are new to development, a strong professional team and broker support are essential to satisfy lenders and keep your timeline on track.

Your funding choices at a glance

1. Purchase bridge - fast capital to secure land or property.

2. Development bridge - acquisitions plus staged drawdowns for build costs.

3. Light refurbishment bridge - cosmetic to moderate works, rapid turnaround.

4. Heavy refurbishment bridge - structural changes or conversions.

5. Auction finance - pre-approved limits for 28-day completions.

6. Second-charge bridge - release equity without disturbing the first charge.

7. Bridge-to-let or bridge-to-development - short-term bridge, then refinance.

8. Mezzanine top-up - layers behind senior debt to boost total leverage.

Quick take

• Funds can be available in 48 hours for straightforward cases.

• Up to 75% LTGDV possible with the right scheme and exit.

• Loans from £5k with no formal cap, secured against assets.

What it costs and what it could deliver

Can you qualify?

Eligibility is pragmatic rather than box-ticking, but lenders still require a robust case. Expect to provide details on the asset, planning status, build method, professional team, programme, and exit route. Experience helps, yet first-time developers can be considered with a strong builder, monitoring surveyor, and contingency planning. Security is typically a first legal charge over the property, with second-charge options where equity exists.

Loan sizing usually references purchase price, build costs, and the gross development value, with up to 75% LTGDV available on certain schemes. Drawdowns are phased against milestones, helping you align interest with actual use of funds. Clean credit is preferable, though specialist lenders can consider adverse events where the project fundamentals are sound. Independent valuations, legal due diligence, and building warranties are standard. Geography across Great Britain is supported, subject to lender appetite.

Kandoo can help package your application, identify lenders that match your project, and secure terms that reflect your timeline, risk profile, and exit strategy.

From enquiry to drawdown - the steps

1. Share your scheme, costs, programme, and preferred exit.

2. Broker sources indicative terms across whole-of-market lenders.

3. Select preferred offer and instruct valuation and legals.

4. Finalise development appraisal, drawdown schedule, and covenants.

5. Lender issues credit-backed offer, you review and sign.

6. Legal due diligence completes and conditions precedent satisfied.

7. Funds released - initial tranche or day-one amount.

8. Ongoing monitoring and staged drawdowns until completion.

Advantages and trade-offs

Read this before you sign

Bridging is a precision tool. The benefit is speed, but that speed makes planning non-negotiable. Stress-test your appraisal against slower sales, lower values, or build cost inflation. Confirm contractor capacity and supply chains, and make sure warranties, insurances, and building control are lined up early. Clarify conditions for each drawdown, including monitoring surveyor sign-off, and keep an eye on interest reserves so you do not run short mid-project.

Your exit deserves equal scrutiny. If you intend to refinance, speak to lenders now about criteria, rental cover, and valuations. If you plan to sell, verify local demand and pricing, not just headline comparables. Finally, ensure your legal advice is truly independent and that you understand any personal guarantees or cross-collateral requirements.

Alternatives worth weighing

1. Senior development finance - longer terms, lower cost, more checks.

2. Joint venture equity - share risk and upside with a partner.

3. Mezzanine finance - sits behind senior debt to boost leverage.

4. Secured business loan - fixed term borrowing against assets.

5. Cash purchase - simplest route, but ties up capital.

Frequently asked questions

Q: How quickly can funds be released? A: In straightforward cases, within 48 hours after valuation and legal sign-off. Complex schemes or titles may take longer, but still typically faster than a mortgage.

Q: What interest rate should I expect? A: Many lenders priced around 0.81% per month in mid-2025, subject to scheme risk, leverage, and experience. Your final rate depends on the asset and exit strength.

Q: How much can I borrow against the project? A: Selected lenders offer up to 75% of gross development value, often with staged drawdowns to match build milestones and protect cash flow.

Q: What security do lenders require? A: Usually a first charge over the property. Second charges are possible where there is sufficient equity and a credible exit strategy.

Q: What is my exit route? A: Common exits are sale of units or refinance into development or buy-to-let finance. Plan the exit at the outset and evidence it to the lender.

Q: Are there early repayment penalties? A: Many bridges have no early repayment penalties, though some charge minimum interest periods. Check your term sheet carefully.

How Kandoo can help

Kandoo is a UK-based retail finance broker with access to high street, specialist, and private lenders across Great Britain. We match your project with lenders that can deliver speed, leverage, and structure - from purchase bridges to staged development facilities. We manage the paperwork, negotiate terms, and keep your timeline moving, so you can focus on building.

Next steps: request indicative terms, line up valuation, and confirm your exit.

Important information

This article is for information only and is not advice. Finance is subject to status, affordability, and security. Terms, rates, and loan-to-value vary by lender and project. Always seek independent legal and tax advice before committing to any finance agreement.