Commercial Bridge Loans for Your Short-Term Real Estate Opportunities
When we talk about bridge loans we are normally talking about opportunity costs with commercial real estate. There is an opportunity that exists and we want to jump on it while it is still available before someone else does. We may also be talking about a scenario in which we have to bridge a gap between where you are right now and where you want to go. Hence the term “bridge loan”.
Banks usually look at the last three years of financials to see if there is proper cash-flow and collateral needed to fulfill their lending requirements for a project. When the financials are not currently sufficient or have not been sufficient for a long enough time period to appease the bank this will usually result in a turn-down. This is exactly why “bridge” financing exists and where we come in.
Bridge Loans Offer More Opportunities!
Bridge financing is available for those commercial real estate opportunities that come around when there might not be sufficient cash-flow and the property or business is not what we call “performing”. Basically “performing” means that the investment or business has enough cash coming in currently to pay the debt and other expenses associated with it. Banks only lend on “performing” properties or businesses. You have to prove to them through financial statement (usually tax returns) that your investment or business is performing before they even consider the commercial loan.
Non-performing or under-performing investments or businesses do not have sufficient cash-flow currently and require another type of financing which we would call “Bridge Financing”. This is money used to transform an investment or business from non-performing status to performing status and within a short period of time.
It is usually interest-only and for a time period of six months to three years because it is only intended to be a short-term solution. The commercial real estate investor or business owner can then secure long-term financing once the project is sufficiently cash-flowing, going from “non-performing” status to “performing status”.
3 Easy Steps to Secure a Bridge Loan
Bridge Financing Through ICA is the Solution
Unlike the banks, we aren’t paid by the hour. We underwrite your file quickly and don’t waste time on term sheets.
Once we obtain all the necessary documentation we start the closing process right away.