A bridge loan is distinctive from other types of loans as it is used to fund something immediate, usually a real estate opportunity, that is time-sensitive. This type of lending ‘bridges the gap’ between immediate need and a long-term funding solution.

Some Other Things to Know About a Commercial Bridge Loan Include:

Shorter-Term Approach

Commercial bridge loans are short-term or they only fill the funding void during an interim. As the borrower waits for longer-term money solutions.

Collateral

You will likely need collateral for this type of lending option. The good news is that typically the real estate being borrowed serves as the collateral for a bridge loan. The value of your collateral- or real estate- often dictates the amount you are eligible to borrow.

Interest Rates

The ease and speed of bridge loans are offset by the higher interest rates that you will pay for this type of funding. These loans can come from banks, alternative lenders, online financial institutions, and private investors.

Other Applications

While it is most common for a bridge loan to be for the purchase of real estate or a business, it is also common to find bridge loans for inventory and working capital. In this instance, the inventory and merchandise may be considered collateral.

Turnaround Time

The turnaround time for your bridge loan will vary- depending on who you borrow from. Traditional banks may give you the money you are seeking, but they likely will take longer to do it than alternative funding sources. Some online banks and financial institutions may approve and disperse funds as soon as 24 hours.

Borrowing Incentives

Before you sign on the dotted line, ask about incentives for prepaying off your bridge loan. Since this is a temporary solution, ask if there is an incentive for paying it off early if you line up more permanent funding soon.

Want to learn more about commercial bridge loans? Talk to the money professionals at Quick Capital Funds today.