What is a Bridge Loan?

Exactly as the name suggests, bridge loans are used to bridge the gap between initial needs and an intended exit. Commercial bridge loans can be used to cover a wide range of transactions: Commercial Real Estate Purchase, Cash-Out, Refinance, Value-Add/Rehab, Development, and Ground-up New Construction. Usually exit strategies will entail a long-term refinance or sale of the subject property. The most obvious benefit of a bridge loan is the speed in which it can close. On average, Simple Commercial Capital is able to close bridge loans in 2 - 3 weeks. Bridge loans are also a great option for those who need flexibility in underwriting criteria. Typically, bridge loans will have less stringent guidelines for Sponsors’ credit and asset stabilization.

How To Get a Bridge Loan?

Bridge lenders consist of insurance companies, non-traditional banks, private equity and private debt funds. Every commercial lender has their own specific criteria and preferences for credit risk (sponsor’s personal experience and credit history) and property details (type, location, occupancy, etc.). The underwriting process for bridge loans is usually much faster than that of a long-term loan. Each lender will provide an offer based on up-front information presented. This will typically come in the form of a Terms Letter or Letter of Intent (LOI). The LOI will detail the terms of the offer including loan amount, loan-to-value, loan term, interest rates and fees.