How to Use Bridge Loans for Commercial Real Estate

Bridge loan financing provides a short-term solution for business owners. They are quick-to-fund loans that can be used for sudden or urgent expenses with the intention for the borrower to refinance or to pay them off quickly due to how expensive they often are. A commercial bridge loan, which is often called commercial bridging loans or even business bridge loans, fits the general definition of bridge loans, but the proceeds are always used for various business expenses.

Usually, business owners seek commercial mortgage bridge loans when there is an appealing and urgent real estate opportunity. After this real estate loan is received, business owners typically pay it off right away or choose to refinance it with a form of funding that is longer-term.

While it can be difficult to wrap your head around the idea of a business bridge loan, they don’t have to be. The title of a “bridge” only really describes how a borrower is going to use the loan, instead of describing a characteristic of the loan. This means that almost any type of business loan may be considered a commercial bridge loan, but only if it’s used in a certain way.

Use the Loan for a Solid Commercial Real Estate Deal

There are many business owners who are going to take the commercial mortgage bridge loan so they can take advantage of an amazing real estate deal when it becomes available. For example, is there a prime storefront in a busy downtown area that’s recently become available. With the commercial bridge loan, you can easily secure the funds needed to make the purchase of this storefront and avoid missing out on a great deal.

After the property is secured, you can refinance it by choosing a more affordable commercial mortgage. This usually takes quite a bit of time to find, apply for, and receive.

Tidying Up Your Business Before It’s Acquired 

Another common way to use a commercial bridge loan isn’t something that really relates to real estate. Businesses that are about to be purchased are going to take on some type of short-term financing, which some people call commercial bridge financing.

Understanding the commercial bridge loan and what it offers can help you figure out if it is something that would be right for your business. By being informed, it is possible to know if this is something you should use for your company or if it is something that would be better off being avoided.

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