Question 1

What is a commercial bridge loan and how does it work?

Accepted Answer

A commercial bridge loan is short-term financing (typically 6 to 36 months) secured by a commercial property. It is designed to 'bridge' the gap between an immediate capital need, such as acquiring a property, completing renovations, or stabilizing occupancy, and the availability of longer-term permanent financing. The borrower makes interest-only payments during the bridge term, then pays off the loan by refinancing or selling the property.

Question 2

What LTV do bridge lenders offer on commercial property?

Accepted Answer

Most bridge lenders offer up to 70 to 75% LTV on stabilized commercial properties and up to 65 to 70% on value-add or transitional properties. The exact LTV depends on the property type, location, borrower experience, and the lender's risk appetite. Bridge lenders focus primarily on the asset value and the borrower's exit strategy rather than traditional income qualification.

Question 3

How fast can a bridge loan close?

Accepted Answer

Bridge loans typically close in 7 to 21 days. Because bridge lenders focus on the asset rather than full income documentation, the underwriting process is faster than conventional commercial mortgages. Some hard money and bridge lenders can close in as little as 5 to 7 days if a recent appraisal or BPO is available.

Question 4

What credit score is needed for a commercial bridge loan?

Accepted Answer

Most bridge lenders require a minimum credit score of 580, though some accept lower scores on a case-by-case basis. Because bridge loans are asset-based, the credit score is less critical than the property value, the borrower's exit strategy, and the borrower's experience with similar projects.

Question 5

What are typical interest rates for commercial bridge loans?

Accepted Answer

Bridge loan interest rates typically start at 8% and range up to 12% or higher depending on the lender, the property type, the LTV, and the borrower's experience. Bridge loans are more expensive than conventional financing because they are short-term, higher-risk, and faster to fund. The borrower pays for speed and flexibility.

Question 6

Can I get a bridge loan on a property with low occupancy?

Accepted Answer

Yes. Bridge loans are specifically designed for transitional properties, including those with low or below-market occupancy. The bridge lender provides capital to stabilize the property, improving occupancy and net operating income, so the borrower can refinance into a permanent loan with better terms once the property is stabilized.

Question 7

What is the difference between a bridge loan and a hard money loan?

Accepted Answer

Bridge loans and hard money loans are both short-term, asset-based financing options. The main difference is the lender: bridge loans are typically offered by private debt funds or specialty finance companies with slightly lower rates (8 to 12%) and more structured terms, while hard money loans come from individual investors or small private firms with higher rates (10 to 15%) and faster, more flexible underwriting. Bridge loans often have more formal processes, while hard money is more relationship-driven.

Bridge Loans

Key Loan Terms

When Does a Bridge Loan Make Sense?

Low-Occupancy Properties

Value-Add Projects

Credit-Challenged Borrowers

Cannabis Operations

Time-Sensitive Closings

Transitional Properties

Frequently Asked Questions

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