What Is a Commercial Bridge Loan?

Real estate investing rarely moves in a straight line. Properties go under contract before the old one sells. Value-add projects need time to stabilize before they qualify for permanent financing. Opportunities show up that require speed.

A commercial bridge loan is built for those moments.

What is a bridge loan?

A bridge loan is short-term financing — typically 6 to 36 months — that covers a gap between your current situation and your next financing solution. It’s designed to move fast and solve a specific problem, not to be your long-term capital structure.

The name comes from the concept: you’re bridging from Point A to Point B. When you arrive at Point B — a sale, a refinance, a stabilized property — the bridge loan gets paid off.

When do investors use bridge loans?

•      Buying before selling: you’ve found the right property but haven’t closed on the one you’re selling. A bridge loan funds the new purchase while you wait for the sale to close.

•      Value-add projects: you’re buying an underperforming property that doesn’t qualify for permanent financing yet. The bridge loan funds the acquisition and gives you time to renovate and stabilize.

•      Speed: a deal requires closing in 10 to 14 days and conventional financing can’t move that fast. Bridge lenders can.

•      Credit or income issues: the borrower doesn’t currently qualify for conventional financing but has a clear path to rectifying that within 12 to 24 months.

•      Construction-to-permanent gap: the construction loan is maturing but the permanent loan isn’t ready to close yet.

How bridge loans are structured

Bridge loans are typically interest-only during the term, with the principal paid off at maturity through a sale or refinance. Rates are higher than long-term loans — generally in the 8 to 12 percent range depending on the deal, the lender, and the borrower — because the lender is taking on more risk and providing speed and flexibility that conventional lenders won’t.

Loan-to-value ratios vary. For stabilized properties, lenders may go up to 70 to 75 percent LTV. For value-add or transitional assets, the LTV is typically lower, with the lender accounting for the as-is condition.

What’s the difference between a bridge loan and hard money?

This comes up often. Hard money is a type of bridge loan — it’s asset-based, short-term, and fast. The distinction is usually in the borrower profile and the asset type. Hard money lenders often focus on residential fix-and-flip. Commercial bridge lenders work across multifamily, mixed-use, retail, office, and larger residential projects.

Both move faster than conventional financing and both are priced at a premium for that speed and flexibility.

What’s your exit strategy?

Bridge lenders underwrite the exit, not just the entry. Before approving the loan, they want to understand how you’re getting out. Sale, refinance, or long-term lease stabilization — your exit strategy needs to be credible and tied to realistic timelines.

If you’re planning to refinance into a DSCR loan after stabilization, the bridge lender will look at whether the stabilized property will realistically qualify for that permanent financing.

Is a bridge loan right for your situation?

Bridge financing is a tool, not a default. It’s the right answer when speed, flexibility, or a transitional situation makes conventional financing impractical. It’s the wrong answer when it’s being used to cover up a deal that doesn’t have a clean path to permanent financing.

If you’re evaluating whether a bridge loan fits your deal, I’m glad to work through the structure with you.

Visit endeavance.com to get started, or take our free Fundability Scorecard at endeavance.com/scorecardoptin.