Getting Started With Commercial Bridge Loans
One of the biggest obstacles in your way when trying to buy your next commercial real estate project is funding, especially if you are still working on the last project. This is where bridge loans come in handy. With this type of loan, you can bridge the financial gap between projects to better take advantage of timely deals.
What Are They?
Bridge loans are financing options designed to bridge the gap between one project being finished and having the capital to put towards another project. These loans use your existing projects as collateral for the loan and are generally considered short-term. This is because as soon as your other projects become solvent, you can pay back the bridge loan instead of waiting for the current project to finish. By getting loans to bridge the gap between projects being solvent and the next one, you can take advantage of time-sensitive projects without over-extending yourself.
Who Offers Them?
Bridge loans can be offered by banks, by investors or by other lending institutions. Some companies are set up to solely provide bridge loans and their underwriters are well versed in commercial real estate and the solvency or timing problems associated with these projects. It is a good idea to do a bit of research into the different lenders to make sure that you are getting the best terms possible.
How Can You Get Them?
Your best bet for this type of loan is to find a list of lenders who offer this financing and then compare their terms. This can get you the best interest rate, the right amount of capital and much more. The more research you do on the lenders, the easier it is to make sure that you are not falling victim to predatory lending practices which can end up bankrupting your company.
You also need to be prepared to defend your projects, past and future, to the underwriters and investors in these loans. So, it is a good idea to have a working knowledge of things like your business credit, the profitability of your projects and even the timeline you are working on.
Bridge loans can help you invest in new opportunities before your last project is completely solvent. These are meant to be shorter-term loans and will usually cover the down payment on a new commercial real estate property so that you can secure that location before the deal goes away. You can find these loans from many lenders who deal with commercial real estate and appeal to the underwriters with your case.