What You Need To Know About Bridge Financing
At some point every commercial real estate investor, owner or developer runs into capital or funding issues. While traditional long-term loans are the go-to source for capital, they’re not always the best choice for a commercial loan. Some situations may not qualify for more traditional loan programs. So…
THE QUESTION: What financing option is there?
HINT: It gets its name because the loan acts as a temporary bridge when a property is in a transitory phase.
The ANSWER: Commercial Bridge Loan – this is an alternative lending source when either a sponsor or property may not meet underwriting requirements for more traditional lending. The financing fees and interest rates tend to be higher than a traditional loan, but funding is faster and the loan terms and conditions are more flexible.
USES OF CRE BRIDGE LOANS:
- acquire a commercial asset
- buyout a partner
- do a cash-out refinance
- purchase or make improvement to an underutilized commercial property
- for businesses looking for space to operate out of (owner-occupied)
PROPERTY TYPES FINANCED:
- Multifamily
- Office
- Self-storage
- Mixed-use
- Retail
- Industrial
PROS OF BRIDGE FINANCING
- quick access to capital
- flexible terms
- typically interest-only
Bridge loans can be an effective tool to invest in more properties to grow your portfolio.
