Commercial Bridge Loans 101: A Complete Overview
A commercial bridge loan helps “bridge the gap” between the purchase of one commercial property and the sale of another. Learn how this program works and if it fits your financial plan below.
What Are Commercial Bridge Loans?
Provides short-term financing for commercial properties
Most commercial bridge loan terms are between a few months to a few years depending on the specific program you choose.
Loan amount is determined by the value of collateral
How much you can borrow is contingent upon the value of the property or assets being used as collateral. The higher the value, the more you may be eligible to borrow.
Requires limited personal financial documentation
Since this program is asset-based, borrowers typically do not need to provide detailed personal financial documentation. You will, however, need to have a professional property appraisal.
What Can Commercial Bridge Loans Be Used For?
Business acquisitions
Commercial bridge loans are ideal for purchasing new office space, financing a merger, acquiring a franchise location, and financing other growth strategies.
Rehab and renovations
Bridge loans can be used to get fast access to funds needed to rehab or renovate a property before securing permanent financing or selling it at a higher value.
Lease-up periods
If a multi-family property is undergoing a lease-up period, commercial bridge loans can help cover expenses until all units are fully leased and generate consistent rental income.
Pros
- Fast approval
- Flexible terms
- No long-term commitment
- Ideal for non-traditional properties
Cons
- May have high Loan-to-Value (LTV) restrictions
- Potential for balloon payments
- Risk of foreclosure
Talk to our mortgage experts today about finding the right loan for you.
Commercial Bridge Loan Alternatives
- Replaces your current loan with one for more than you owe
- Gives you the difference in cash
- No restrictions on how the money is used
- Longer repayment terms than bridge loans
- Uses your home equity as collateral
- HELOANs offer a one-time lump sum payment
- HELOCs offer a replenishing credit line
- Best for properties with significant equity
- New construction loans provide financing to build a home from the ground up
- Funds are released in increments for each project stage
- Allows homeowners to completely customize their living space
How Do I Know If a Commercial Bridge Loan Is Right for Me?
You need money quickly
If there's a time-sensitive opportunity on the table, a bridge loan gives you the funds needed to take advantage of it and lets you sort long-term financing out later.
You have a clear plan for repayment
Since this program is short-term in nature, you should have a strategy for how you will repay or refinance before you take out the loan.
You have sufficient equity
Higher equity amounts allow you to borrow more, so this program can be an ideal fit for business owners with multiple assets or a significant equity position.
When Is the Best Time to Take Out a Commercial Bridge Loan?
The best time to take out a commercial bridge loan is when you’re expanding or relocating your business, when you’re completing a major renovation project, or during the sale of a property if the timing doesn’t align with your next purchase.
This program can also be a good option for supporting your business through a transitional period or buying up property quickly before a competitor can get to it. Whether you’re acquiring assets, expanding operations, or waiting for a sale to finalize, a bridge loan provides the flexibility and speed needed to keep things moving forward.
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FAQ
Can I use a commercial bridge loan to purchase a distressed property?
What do I need to apply for a commercial bridge loan?
- Proof of property ownership or collateral (such as the deed or asset details)
- Business financial documents, including income statements, balance sheets, and tax returns
- Personal financial information, including credit history and personal guarantees (in some cases)
- Detailed business plan or exit strategy outlining how you intend to repay the loan
- Property appraisal or valuation to determine its current market value
- Identification documents and legal paperwork for the business or borrower
Is a down payment required?
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