By design, commercial bridge loans are interim commercial property loans collateralized by commercial real estate that bridge gaps for you as the borrower that muscle their way in between you and your next commercial property transaction. This type of commercial real estate financing helps you to circumvent  liquidity constraints and take full advantage of time-sensitive opportunities in a time-efficient manner.


Commercial bridge loans enable you to have access to short-term funds that bridge cash flow timing gaps allowing you or your Company to execute some sort of interim task. For example, if you have to pay a balloon payment that’s soon to be due on an existing commercial loan, you could deal with that balloon payment until you receive permanent financing. Or if there is only a limited time-frame during which a particular piece of commercial property is available, you can utilize bridge financing to get that asset, then repay your bridge loan with funds from your permanent commercial mortgage. So, fundamentally, commercial bridge loans are short-term commercial real estate financing vehicles that you have the option to use for temporary financing until you improve, refinance, lease up, sell, or complete the property.

As a way to compensate for their short-term nature and their greater risk level, bridge loans are inclined to have greater rates of interest than permanent commercial mortgage loans. Generally, commercial property bridge loans have terms that range from six months to one year. Quite a few commercial bridge lenders actually allow you as the borrower to extend your bridge loan for an additional 6 months to 1 year for a fee that usually ranges from a half-point to 2 points on a case by case basis.


Commercial property bridge loans are generally repaid when the borrower places permanent financing on the real estate, after  improvements are finished and new tenants move in. As a consequence of their short-term attribute, bridge loans usually don’t have any prepayment penalties.

An Example…

Here’s a typical commercial real estate bridge financing scenario: Let’s pretend that you’ve got a 275-unit less-than-perfect apartment complex running at 40% vacancy in a seriously nice area under contract at $10 million. Your in depth due diligence has demonstrated that the property will likely be worth $22 million after just $3 million in renovations that can take seven months to finish, after which you should be able to raise the rents to warrant the higher post-renovation valuation. Consequently, you collateralize the subject property to get a $13 million commercial bridge loan to cover the purchase plus renovations, complete the work, lease-up the apartment complex to over a 90% occupancy rate, then 7 months in the future, you refinance the property with $22 million permanent financing generally in the form of a conventional commercial mortgage loan based on the greater post renovation valuation from which you pay back your original bridge loan in full.

So, commercial bridge loans offer you short-term commercial real estate financing when you require time to fill gaps with regard to your cash flow from operations while you finish such tasks as doing improvements, locating new tenants, selling, purchasing, or refinancing real estate, then concurrently pay back your commercial bridge lender making use of a portion of the proceeds from any permanent financing that you manage to obtain.