Introduction to Commercial Bridge Loans
Sometimes when a commercial real estate deal is funding, borrowers also need a short-term solution for additional financing. Bridge loan financing is a short-term solution that is quick to fund and allow borrowers the option to pay for any expense to refinance or pay off the loan. Commercial bridge loans are similar to bridge loans that homeowners can apply for, but, the finances are put towards a business expense.
Business owners can apply for commercial mortgage bridge loans if there is an important real estate investment opportunity. Owners will have to quickly pay off the loan or refinance it with a longer-term form of funding. Any business loan can be considered a commercial bridge loan.
Quick-to-fund loans allow business owners and investors the chance to quickly fund whatever urgent expense may come up as long as the investor or owner isn’t looking beyond traditional sources of funding. Banks traditionally take months to fund business loan applications, so investors often have to look outside of quick-to-fund options. Short-term alternatives will also be able to fund a loan with less than a week to get a bridge loan funded.
Investing in Commercial Real Estate
Commercial mortgage bridge loans are used to help commercial real estate deals when available and allow investors to secure the funds they would need to purchase vacant properties quickly. Once the property is secured with the loan, it can then be refinanced with a more affordable commercial mortgage. Commercial real estate purchase are usually time-sensitive and are one of the reasons investors look for commercial bridge loans.
Commercial bridge loans are a solution to many common business finance issues, but they do come with their fair share of risks. They can mean getting stuck with a high-interest commercial real estate loan with no way out, or an investor can be stuck paying off high-interest debt for a very long time.
Commercial bridge financing is very risky, but in the long run, it might be what is best for a business or for an investor looking to finance a project quickly. Any investor looking for a time-sensitive investment opportunity should look into a commercial bridge loan.