What Is The Purpose Of A Commercial Bridge Loan?
Commercial bridge loans are about securing short term financing while an exit strategy, such as a sale or refinance, is being finalized.
One of the reasons bridge loans exist is to help facilitate the sale or purchase of commercial real estate by providing funding for the completion of upgrades or necessary renovations. Often times, these critical upgrades can be what makes or breaks a sale.
Bridging loans can also be a way for borrowers to procure financing if they find they aren’t yet able to quality for permanent financing.
While the primary use of a bridge loan is to improve a property that needs a significant amount of renovation before a lender is ready to provide a permanent form of financing, there are other reasons borrowers come to Vault Capital Partners for bridging finance:
- If a property currently has unsatisfactory occupancy rates
- The borrower needs a stronger credit profile
- Situations where permanent financing is far off
Commercial bridge loans have a wide variety of uses. They can be put into place to refinance or purchase hospitality buildings like hotels and motals, retail business property, office buildings, apartment buildings, etc. They can even be used for raw land that will be developed for commercial purposes.
Commercial bridge loans provide the cash injection that investors need to capitalize on an opportunity with a narrow window, take care of any remodeling or renovation needs, and create the amount of time needed to secure permanent financing or sell.