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Why Some Commercial Real Estate Borrowers Are Turning to Bridge Loans



Bridge financing has long been a strategy for many of our experienced commercial real estate investors.


Low-interest, long-term financing typically requires full stabilization -- 90% occupancy and sufficient income. Fully stabilized properties are less risky. But experienced investors tend to look for that diamond in the rough -- an underperformer that can really shine with some TLC. A bridge loan can be instrumental in purchasing as well as rehabbing these properties because a bridge loan:


Doesn't require full stabilization


Isn't as document intensive


May close more quickly


Another important advantage of the bridge loan is the flexible term, which can either run for 1-3 years or be paid down earlier with little or no penalty. Once the property is stabilized, the bridge may be taken out by a low-interest long-term loan.


There are other reasons to seek bridge financing. Borrowers with late mortgage payments can use a bridge loan to build the required 12-month payment history and then refinance into a long-term loan. Tax liens disqualify borrowers from long-term loans even with stabilized properties. A bridge can be used to pay off the lien so the borrower can later secure long-term financing.


Today, more seasonal and expanding businesses are looking for bridge loans. They can’t qualify for long-term because income is temporarily low. With a bridge, we may be able to consider prior income -- before the temporary setback -- to show how the property is expected to perform as the business recovers.


Some borrowers took out high-interest business lines of credit to keep up with payments and now they’re struggling. Moving to a bridge loan, especially with an interest reserve, may lower payments, stave off foreclosure or credit issues, and eliminate the need to sell the property at a distressed price. Once the property regains profitability, the borrower can move back into a long-term loan. The same goes for high-rate construction loans that reach maturity before the property is stabilized.




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Many loans funded by Boulder Equity Partners are referred by third parties, including Commercial Loan Brokers, Equipment Leasing companies, Real Estate Agents, CPAs, Business Consultants, Factors, Merchant Cash Advance brokers, and other intermediaries that help business owners with their financing needs.


Referral partners are paid for every loan that funds, even where the staff at BEP does the lion's share of the work. Referral fees are also paid for renewals for the life of the client relationship. Many of our Referral Partners were intimidated by the prospect of referring Commercial Real Estate clients in the past. But once they received their first five-figure commission, we became fast friends!


Feel free to reach out to me and learn how to extract Commercial Real Estate leads from your database, earning income from past or present clients. You will be surprised at the amount of revenue that is sitting latent in your client files.