Drawing on equity: a new use case for secured overdrafts in business lending

Bridging finance is usually seen through a property lens, and for the most part, that lens has been accurate. It has traditionally supported developers, investors or landlords working to short timeframes, with funding directed at real estate through acquisition, improvement or planning related needs.

However, in recent months, we have seen a shift in how some of these facilities are being used. A small but growing number of borrowers are turning to secured, revolving finance to support business expansion. Not in property, but in entirely different sectors. The drivers behind this shift vary, but they often stem from a lack of suitable alternatives, particularly where flexibility and speed are essential. And while the scale is still modest, the outcomes suggest this type of lending may be unlocking growth in areas not previously associated with bridging.

Low confidence, shifting behaviour

The broader environment for small business lending helps explain why this is happening. In July 2025, the Federation of Small Businesses (FSB) reported that, for the first time, more small firms expected to shrink, be sold or close than to grow in the year ahead. Just 25% anticipated growth, while 27% expected contraction. These findings, published in the FSB’s Q2 2025 Small Business Index, marked an unprecedented dip in confidence across the sector.

At the same time, the way businesses access finance is changing. In its May 2025 response to HM Treasury and the Department for Business and Trade’s call for evidence, UK Finance highlighted the rising importance of intermediaries in the small business lending market. According to the report, 60% of new SME lending by value is now arranged outside of high street banks, with broker led funding playing a central role. The National Association of Commercial Finance Brokers (NACFB) reported that its members alone facilitated £26.5 billion of SME lending in 2024. Alongside this, UK Finance noted that speed and ease of application have become core expectations for borrowers, especially where cashflow is critical.

Taken together, these findings paint a picture of a lending market under pressure. Business owners are operating in a low confidence environment, while traditional funding routes often fall short on pace and flexibility. In this context, secured overdraft style facilities are beginning to prove their worth. They give brokers an alternative route for clients who need to act quickly, draw funds in stages, or avoid committing to a rigid term loan structure.

How secured overdraft facilities work

These facilities are simple in design but effective in practice. Borrowers can draw and repay funds as needed, within an agreed limit, paying interest only on the amount used. The arrangement remains open for a set period and can often be renewed, giving clients greater control over their funding without needing to start again each time capital is required.

The facility is secured against property. This is typically a main residence, commercial asset or investment unit. The lender takes a legal charge, which helps reduce risk and in turn allows for more competitive pricing than unsecured borrowing. The borrower then draws funds as and when required, giving them room to respond to real time business needs.

Why brokers are exploring new use cases

While the structure is familiar, the shift lies in how it is now being applied. Historically, facilities of this type were tied to property transactions, often supporting short term purchases or development timelines. More recently, however, brokers have placed cases where the funds are used for wider commercial purposes, from business expansion to short term working capital or project costs.

This is changing the profile of the client. In many cases, borrowers are no longer developers or landlords. They are business owners with equity in property but no intention to acquire more. The question is not whether the client needs finance for real estate, but whether their property assets can support a commercial ambition that falls outside the traditional lending framework.

A real example from outside the property sector

One of our recent cases at Alternative Bridging Corporation illustrates this clearly. A tattoo parlour business based in the West Midlands required funding to open several new branches, responding to a time sensitive expansion opportunity. We provided a facility of £1,267,000, secured as a second charge against the owner’s main residence, which was valued at £1.95 million. The loan completed at 65% LTV and was finalised just six weeks after the initial enquiry.

Importantly, the funding was used solely for business growth, not for property acquisition or refurbishment. The client needed quick access to capital and benefitted from a structure that allowed stage by stage drawdown without the need to reapply or renegotiate terms at each step. For this borrower, flexibility was essential and the facility gave them the ability to act decisively.

Not a replacement, but a timely option

Cases like this remain relatively uncommon, but they are becoming more visible. They demonstrate how secured overdraft lending, when well structured, can provide a route to business finance that is responsive, controlled and aligned to real commercial need. They also challenge the assumption that bridging is only for property professionals.

This is not a replacement for other types of finance. It simply gives brokers another option to consider when a client’s needs do not match what traditional lenders can offer. In a market defined by caution and complexity, that kind of flexibility is no longer a luxury. It is often the deciding factor.