Commercial bridge loans give investors short-term capital to buy, reposition, or lease up property before permanent financing. Learn how they work.
A bridge loan is short-term financing that "bridges" the gap between now and a future event: a sale, a refinance, or the point when a property qualifies for permanent financing. In real estate, commercial bridge loans are most often used when timing or the property's current condition makes a long-term loan unavailable or impractical.
Bridge loans are part of FundLogic's broader real estate financing platform. They are designed to move faster than bank financing and to work with properties that are in transition.
Bridge loans can be used for multifamily, mixed-use, retail, office, industrial, and other commercial property, as well as residential investment property.
Bridge loans are typically:
Some bridge loans include a holdback for capital improvements or leasing costs, released as the work is completed.
The central question for any bridge lender is: how will this loan be repaid? Underwriting typically focuses on:
Lenders also want to see that you have the cash to cover closing costs, interest during the term, and any shortfall if the business plan runs long.
A bridge loan application is stronger when the exit is well documented, for example with a rent roll, a renovation budget, and a projected stabilized income that would support permanent financing.
Bridge loans cost more than permanent financing. Across the industry they generally carry higher interest rates than long-term loans, plus origination fees and sometimes exit or extension fees. That premium pays for speed and flexibility.
The main risk is the exit. If the business plan takes longer than expected, or interest rates and property values change, refinancing may be harder than projected. Build in time, keep reserves, and stress-test the refinance at a lower value and higher rate before you commit.
When a bridge loan may not be the best tool:
The terms overlap. Both are short-term and asset-focused. "Hard money" usually refers to private, asset-based loans that emphasize speed and collateral above all, often at a higher cost. "Bridge loan" is used more broadly, including for larger commercial deals underwritten on a business plan and exit strategy. The right choice depends on the deal.
Commercial bridge loans are typically structured for roughly one to three years, depending on how long the business plan needs. Many include extension options for a fee if the property needs more time to stabilize. Your term should match the time you realistically need to lease up or renovate, plus a cushion.
Yes. Investors and business owners sometimes use bridge financing to purchase a new property before an existing one sells, then repay the bridge loan from the sale proceeds. Lenders will look at the equity in both properties and how likely the sale is to close on time.
The most common exits are refinancing into a long-term commercial mortgage, DSCR loan, or SBA loan once the property is stabilized, or selling the property. Lenders want to see that the exit is realistic based on current market rents, values, and lending standards, not just the best-case projection.
Bridge loans generally close faster than bank or agency loans because underwriting focuses on the property and business plan. Timing still depends on third-party reports such as the appraisal, environmental review, and title. Having your documents ready speeds up the process.
Tell us about the property, the business plan, and your exit, and we will help you structure bridge financing that fits the timeline. Apply to pre-qualify — pre-qualification will not affect your credit. You can also review all real estate financing options.
