Bridge loans are sometimes referred to as ‘hard money loans’, because they are generally based on hard assets like real estate. The ‘bridge’ term in the name refers to the fact that they can often serve as a bridge to another transaction, such as taking advantage of a limited-time opportunity to purchase another asset.
Conventional banks typically cannot fill this kind of need because their loan processes take too long and lack flexibility. Bridge loans can provide a solution where an alternative lender can help an investor with funding for an immediate purchase, bypassing many of the constraints which banks are bound by.
Here are some advantages offered by bridge loans:
- Fast execution – as stated above, conventional lending institutions simply lack the flexibility to respond quickly enough when a loan is needed for an opportunity that may be offered only briefly. A bridge loan can be set up very quickly to take advantage of such an offer.
- Filling the gap – a bridge loan can fill the gap when you lack investment funding, providing you with needed capital while you wait for your own real estate to be sold on the market
- Partner buyout – bridge loans are often used to buyout partners who wish to pursue other business opportunities, which then benefits you as sole proprietor of your real estate business
- Flexible payback – in some cases, your real estate collateral will have sufficient interest reserve so that a larger loan can be granted, and you can receive more flexible terms of repayment
- Agile specifications – unlike conventional loans, there are no concrete specifications for a bridge loan, so you can negotiate with your alternative lender to structure the right bridge loan for your business
Who offers bridge loans?
When you need to react quickly on a real estate opportunity, a bridge loan from a reputable alternative lender like Liberty Commercial Capital can provide the ideal solution. They understand the need for timely funding, and may be able to help you achieve your commercial real estate objectives.