Bridge Loans: Putting An End To Financial Waiting
You have the perfect property in your sights. Contractors have been hired for renovations. Large commercial financing is being processed and waiting in the pipeline. Suddenly, you realize you need to cover the costs of permits, inspections, and other immediate costs, but there is no working capital available. In order to fix this situation – which is not uncommon – many commercial real estate investors turn to bridge loans.
How Bridge Loans Work
Bridge loans (sometimes referred to as hard money loans) are short-term financing solutions designed to cover time-sensitive costs while larger loans and other forms of financing are being processed for the larger portions of real estate projects. Bridge loans can be arranged quickly, and payments are very manageable. Depending on the overall size of the project at hand, some commercial real estate investors will take out a bridge loan, and then use the larger funding amount to pay off the small loan, when money becomes available. This type of strategy is used frequently, where bridge loans are figured into the amount requested when applying for larger funding ahead of time.
Full Steam Ahead
With bridge loans, projects do not have to get placed on hold while waiting for larger financing to become available. Hired contractors will not have to rearrange their projects with other customers, and commercial real estate investors do not have to wait on thorough inspections to get an idea of what really needs to be done to a property. Renovations, construction, ground breaking – everything can move ahead as scheduled without financing holding anything up. Bridge loans are designed to fill in those gaps in financing so nothing loses momentum.
Apart from how quickly bridge loans can be arranged (some as quickly as 5 days), they can also be structured so there is interest-only amortization, and payments are very manageable. This gives CRE investors the flexibility they need without placing a strain on cash flow.
If you would like to learn more about bridge loans, or explore any of our other commercial real estate financing options, contact CounselPro Lending at 1-888-292-3322. We work with CRE investors across the country, and even internationally, to ensure they have the finances necessary to complete projects of all sizes.