BRIDGE LOANS
What is a bridge loan?
A form of short-term financing that can serve as a source of funding and capital until a Company secures permanent financing or removes an existing debt obligation. Commercial bridge loans are typically used to bridge funding gaps for real estate investment opportunities.
Traditional loans vs. Bridge loans
Traditional loans often require collateral or personal guarantees. As an unsecured business loan, it allows the flexibility to help your business without the need to leverage personal or business assets. You are able to get the cash you need without restrictions and complications that typically come with traditional loans.
When Can Bridge Loans Be Used?
A bridge loan is often used in real estate transactions to provide cash flow during a transitional period, such as while moving from a current residence into a new home.
Homeowners can use these short-term loans, which can help quickly put more cash in their pockets, to finance a new home or pay off an existing debt obligation. In fact, bridge loans are frequently used by individuals to bridge the gap between the purchase of a new home and the selling of their current home.
This is just one example, and bridge loans can be used in a variety of industries, including commercial real estate. These are loans that are used to finance a real estate purchase or renovation immediately, while you're in the process of arranging a long-term form of funding.
Of course, commercial bridge loans, refer specifically to bridge loans used by a business—for commercial purposes.
Key Points to Understanding Commercial Bridge Loan Financing
Lenders offering commercial bridge loans will require that you put up your real estate property or investment as collateral and will offer fairly short terms.
Additionally, commercial bridge loan lenders will typically determine the loan amount they offer based on the property that you're purchasing, acquiring, or renovating.
Lenders will evaluate this property in terms of loan-to-value ratio (LTV) or after-repair value ratio (ARV)—and offer a loan amount equal to 70 to 80% of the property's value.
Our partner, GRA Capital's, application process is quick and does not focus on personal assets or credit
Amount: $50,000 to $500,000
Term: 90 to 120 Days
Interest Rate: 2%-3% per month
Fee: 3% to 7%
Limited covenant credit facility