When you need a short-term commercial real estate loan, just until a mortgage transaction you’re involved in is closed or completed, a bridge loan could work for you. A bridge loan is a commercial funding option that provides a temporary financial “bridge” between transactions. Bridge loans must generally be repaid within 6 months to 3 years. By the end of that short-term loan period, you’ll either sell the property or refinance it, to get a long-term mortgage or investor financing.
How to Use a Commercial Bridge Loan
Commercial bridge loans can help you to purchase a retail property, office building, hotel, apartment building or multifamily property, or land for commercial development. Your real estate investment business could use a bridge loan when you’re waiting for a long-term loan to be completed—or while you’re waiting (or making changes) to qualify for the mortgage.
For example, you might use a bridge loan in these situations:
- To purchase non-owner-occupied income properties, which don’t qualify for SBA loans.
- To take action on a good property deal, when you cannot wait for standard commercial mortgage approval and funding. (Bridge loans close quickly.)
- To buy a building or rental property that needs remodeling or rehabbing to qualify for a mortgage. (Bridge loan amounts are based on the improved value of the property, rather than its existing, unimproved value).
- To purchase a commercial office building with low occupancy, which won’t qualify for a mortgage yet.
- To allow time to improve your credit score.
- To give you time to line up your investing partners, who will own or renovate the building with you.
Now that you have some information on bridge loans, you have a powerful tool to help you close future property deals.
Learn more about bridge loans for your business. Contact the experts at Kasher Capital today.