Quick answer
A capital raise bridge is a short-term private loan, secured on property owned by the founders, directors or the company, that funds a business until an equity round, investor commitment or crowd-sourced offer settles. The raise proceeds are the exit. Because rounds often slip, the loan should be sized and timed for delay, and backed by a second way to repay, such as a property sale or refinance.
Key points
- Keeps the business running while an equity round or investor commitment completes
- Secured on property, so it doesn't depend on investors' timing to be approved
- Avoids raising at a weaker price just because cash is short
- Rounds slip: size the term and interest allowance for delay, and keep a second exit
- Interest can be prepaid or capitalised, so cash goes to the business, not repayments
- Amounts
- $20k – $5m
- Exit
- Raise proceeds, with a back-up exit
- Speed
- 24–48 hours possible once documents are in
- Assessment
- No formal valuation required
Equity rounds rarely complete on the date in the first email. Lead investors want one more data room request. A co-investor’s committee meets next month. The crowd-sourced offer needs its full period. Meanwhile, wages are due every fortnight, a supplier wants payment before shipping, and the company’s bank balance is falling.
A raise bridge fills that gap. It’s a short-term loan, secured on property a founder, director or the company owns, that keeps the business running until the raise arrives, and is repaid from it. Done well, it stops founders accepting a worse price simply because they ran out of time. Done badly, it puts a home at risk on the strength of a term sheet. This page covers both sides.
Why bridge a raise rather than wait?
The business.gov.au funding guide sets out the basic trade: debt keeps ownership but must be repaid; equity brings no repayments but means giving up part of the business and its revenue. A bridge combines the two for a short time. You borrow briefly to protect the equity price.
Common reasons to bridge:
- The round is agreed in principle but documents take weeks.
- An investor’s money arrives in tranches.
- A crowd-sourced offer has a minimum period and cooling-off.
- A grant or refund is confirmed but not yet paid.
- The business needs to hit a milestone first, such as a contract or product launch, to justify the price investors have discussed.
What timing rules shape when raise money arrives?
ASIC’s fundraising guidance explains that public companies generally need a disclosure document to offer securities, and lists offers that may not need one. They include personal offers to fewer than 20 people in a 12-month period raising no more than $2m, which must not be advertised, and offers to certain investors presumed not to need disclosure. Whichever path your lawyer chooses determines the paperwork and therefore the timetable.
For crowd-sourced funding, ASIC says unlisted public companies with less than $25m in assets and annual turnover, and eligible proprietary companies meeting extra requirements, can raise up to $5m in any 12-month period. Offers must go through an intermediary holding an Australian financial services licence, and investors have a five-day cooling-off period. Add the offer period, cooling-off and the intermediary’s settlement process to your plan.
None of this is our decision to make; it’s why a bridge needs a realistic term.
How does a raise bridge work?
- Map the raise. Who has committed, what’s signed, the expected completion date and the worst realistic date.
- Pick the security. A founder’s home, an investment property, the company’s premises, or a director’s property as third-party security.
- Define the fallback. If the round fails or shrinks, how will the loan be repaid?
- Enquire. Property details, what’s owing, the amount, and the raise timeline.
- Receive terms and a Letter of Offer, then sign and settle.
- Repay from the raise, ideally under a clause in the round documents that directs part of the proceeds to the bridge.
Which structure suits a raise bridge?
| Situation | Structure | Notes |
|---|---|---|
| Founder’s home with a bank loan | Second mortgage or caveat | Bank loan stays; caveat can later become a registered second |
| Company owns its premises outright | Private first mortgage | Strongest position, generally keener pricing |
| Several founders, one with equity | Third-party security with guarantees | Agree between founders how the property owner is protected |
| Small, very short gap | Caveat loan | $20k–$250k possible same day |
A second mortgage or caveat sits behind another lender and generally costs more than a first mortgage.
How does a property-secured bridge compare with other options?
| Option | Upside | Downside |
|---|---|---|
| Property-secured bridge | Quick; doesn’t need investors’ sign-off to approve | Property at risk if both exits fail |
| Raising sooner at a lower price | No debt | Founders give up more equity |
| Convertible note or SAFE from existing investors | Aligned with the round | Depends on investors’ appetite; dilutes later |
| Unsecured business lender | Fast for established revenue | Small amounts; frequent repayments |
| Cutting costs to stretch runway | No borrowing | Can damage growth before the round |
| Venture debt | Designed for funded start-ups | Generally aimed at companies that already have institutional backers |
Who does a raise bridge suit?
It suits:
- companies with signed term sheets or firm commitments and a clear completion path;
- founders who’d otherwise accept a lower price to get cash quickly;
- businesses with a confirmed grant or refund on its way;
- founders or companies with property equity and a credible fallback.
It doesn’t suit:
- companies that haven’t found a lead investor yet;
- founders whose only property is the family home and whose fallback is “another round”;
- bridges that would need rolling over two or three times.
When is a raise bridge the wrong move?
- The round isn’t real yet. Interest from investors isn’t commitment. If there’s no lead and no signed terms, a bridge only postpones a hard decision.
- There’s no fallback. If the raise fails and the property can’t be sold or refinanced in time, you face default on a secured loan. Our guide to exit strategy red flags lists the warning signs.
- The cost of the bridge exceeds the dilution it saves. Run the sums with your adviser.
- Investors would be put off. If your lead investor objects to secured debt, discuss it before you borrow.
What happens if the round is late, smaller, or fails?
Plan for each case before you sign, because each one changes the exit.
The round is late. This is the most common outcome. Build a buffer into the term from the start, so a four-week slip doesn’t become a crisis. If it looks like the slip will outlast the term, talk to the lender early. Our guide to loan term extensions explains what an extension usually involves and why asking late costs more.
The round is smaller than planned. If investors commit $1.5m instead of $2.5m, the bridge is still repaid first, but the business keeps less runway. Agree with your board how much of a reduced round goes to the bridge and how much stays in the business.
The round fails. Then the fallback carries the whole load. A fallback that relies on a property sale needs time to market and settle, so the term should allow for that too. A caveat loan can be converted to a registered second mortgage if the sale needs longer, but that is a step to arrange in advance, not on the last day.
The round completes early. Check how early repayment is treated in your Letter of Offer. Prepaid interest may not be refundable in full, so if completion is likely to be early, capitalised interest can be the better choice.
Whichever happens, keep investors and the lender informed. Surprises at the end of a term are what turn a bridge into a problem.
What it costs (without the guesswork)
There’s no table of prices. Each bridge is priced on its security, LVR, term and exit, and we aim for the sharpest price your position allows. Costs include:
- interest, prepaid or capitalised so cash goes into the business, or paid monthly;
- an assessment fee, varying per loan and stated on the Letter of Offer;
- legal and registration costs, plus discharge costs at repayment.
No formal valuation required keeps one more third party, and one more delay, out of a timetable that’s already tight.
Illustrative example: bridging a seed round
Illustrative: a Sydney software company has signed term sheets for a $2.5m seed round, expected to complete in ten weeks. It needs $350k now for salaries and a hosting contract. A co-founder owns a home worth about $1.9m with $900k owing. At an illustrative 65% LVR band the home supports total secured debt of about $1.235m, leaving room of about $335k behind the bank. The other co-founder’s investment unit, worth about $600k and debt-free, is added as third-party security.
| Item | Amount |
|---|---|
| Private loan over the home (second mortgage) and the unit (first mortgage) | $385,000 |
| Less illustrative allowance for 6 months’ capitalised interest | $(25,000) |
| Less assessment fee, legal and registration costs | $(10,000) |
| Net funds to the company | $350,000 |
The term is six months, not ten weeks, to allow for slippage. The round documents direct the first proceeds to repay the bridge. The fallback is the sale of the investment unit. The figures are round and illustrative only.
Key terms
- Term sheet: an outline of a round’s main terms, usually not binding until the full documents are signed.
- Completion: when the round’s documents are signed and the investors’ money is paid.
- Tranche: part of an investment paid at a set time or on a milestone.
- Fallback exit: the second way to repay if the first doesn’t happen; see the exit strategy glossary entry.
Documents you’ll need
- Term sheets, commitment letters or the crowd-sourced offer details
- The expected timetable and any conditions to completion
- Recent management accounts and the cash flow forecast to completion
- Company details, cap table and any existing debt
- Photo ID for every borrower, director, guarantor and security owner
- Title details and loan statements for the security property
- Evidence of the fallback exit
How fast can a bridge settle?
With the file complete, loans up to $5m can be possible within 24–48 hours, and smaller amounts against property can be possible the same day. If the money you’re waiting on is a tax refund or R&D offset rather than equity, read bridging until a tax refund arrives. If the raise is to fund growth you could start sooner with property equity, see business expansion funded by property, or if a large contract is driving the raise, funding a big contract. Founders in New South Wales can read about private lending in Sydney.
Round close but not closed? Send us the raise timeline and the property and we’ll tell you what can be bridged.
Waiting on a raise? See if you qualify
There’s no credit check to enquire, and your company’s details aren’t sent around a panel. A specialist who understands raise timelines looks at it personally. fundU, our lending partner, assesses the property directly.
Be clear about what’s committed, what’s still being negotiated, what the property is worth and every loan on it. Accurate details are what let us give you a firm answer straight away. Start your enquiry.
Frequently asked questions
We have term sheets for a $3m seed round but completion is eight weeks away and we need $400k for payroll and inventory now. I own a home in Balmain. Can we bridge it?
Yes, if the property has the equity and the plan is credible. A second mortgage or caveat over the home can fund the $400k, with interest capitalised so nothing is paid monthly, and the loan repaid from the round when it completes. Plan a fallback in case completion takes longer than eight weeks.
Is a term sheet enough to count as an exit?
It helps show the plan, but term sheets are usually non-binding. A lender will look at how firm the commitment is and, more importantly, at a second way to repay if the round shrinks or fails.
Why not just raise at a lower price now?
Sometimes that's the right call. A bridge makes sense when the round is genuinely close and raising in a hurry would cost the founders more equity than the loan costs. If the round isn't close, a bridge only delays the decision.
We're raising through crowd-sourced funding. Can a property loan bridge until it completes?
It can. ASIC says eligible companies can raise up to $5m in any 12 months through crowd-sourced funding, through a licensed intermediary, and investors have a five-day cooling-off period. Build the offer period, cooling-off and the intermediary's settlement into your loan term.
We're raising from a handful of private investors without a prospectus. Does that affect timing?
Possibly. ASIC lists personal offers to fewer than 20 people in 12 months, raising no more than $2m in that period, among the offers that may not need a disclosure document, and such offers can't be advertised. Your lawyer will confirm the path, and the paperwork it requires affects when the money arrives.
Can the company borrow, or does it have to be me personally?
Either can work. The company can borrow with a director's property as third-party security, or the director can borrow for the business purpose. Your accountant and lawyer should advise on which suits the raise and the cap table.
Will new investors object to a secured loan?
Some may, so disclose it. Investors usually prefer to know their money will repay a short bridge rather than discover it later. Agree in the round documents that part of the proceeds will repay the loan.
What if the round falls over entirely?
Then the back-up exit has to work, such as selling or refinancing the security property, or another capital source. That is why the property and the fallback matter more than the round itself.
We're waiting on a government grant rather than equity. Is that similar?
Similar in shape. A confirmed grant or refund with a known payment date can be an exit. If you're waiting on a tax refund or R&D offset, our page on that situation covers the timing.
How long can a bridge run?
Private first mortgages can run for 1 to 24 months. Second mortgages and caveats are typically shorter. Set the term for a realistic delay, not the best-case completion date.
Can a convertible note investor also be repaid from the loan?
The loan can be used for business purposes, and how you deal with convertible notes is a matter for your lawyer and the note terms. Tell us what the funds will be used for and we'll tell you if it fits.
How fast can a bridge settle?
Once documents are in, loans up to $5m can be possible within 24–48 hours, and $20k–$250k against property can be possible the same day.
Do you lend on the company's intellectual property or shares?
No. The security is real estate: residential, commercial or industrial property, with vacant land and rural property considered case by case.