Bridge Loan Options for Commercial Lending
If you need any type of business financing, especially for purchasing or funding real estate projects, you may have found the commercial bridge loans at some point. However, bridge loans are a unique type of short-term financing that functions differently from more traditional business loans.
The purpose of a bridge loan is to give you the funding needed to take advantage of a new opportunity right away. Most lenders that offer commercial bridge loans will make it necessary for you to put the investment or real estate property up as collateral. In most cases, they offer shorter terms. Some specific ways to use commercial bridge loans can be found here.
Commercial Real Estate Investments
A business bridge loan is synonymous with a commercial real estate bridge loan. However, unlike traditional loans, a bridge loan allows you to take advantage of an immediate real estate opportunity that may pass by if you don’t act fast.
After securing the funding and real estate, you can refinance the loan with a traditional commercial real estate loan. Usually, this takes more time to find and be approved for, which is why it isn’t ideal for situations where you need to act quickly.
Improve Your Business before an Acquisition
While bridge loans are mostly used for real estate purchases, they can also be used for other things. For example, is your business moving through an acquisition deal? If so, you may opt for interim financing, in this situation, a commercial bridge loan to get the capital needed until the acquisition is complete.
Usually, you will qualify for bridge financing in this situation because your business has another source of capital waiting, the buyer, to pay back the short-term funds.
Increase Inventory On-Hand
With a bridge loan, you can stock up on inventory. For example, have you recently come across a large liquidation sale of inventory you usually stock? If so, you may want to take advantage of getting more inventory at a lower price. If this is the case, capital is needed.
Short-term financing in the form of a commercial bridge loan can be used to make this purchase. Once you have secured the inventory, you can refinance the bridge loan using a more affordable, longer-term loan.
Getting a Bridge Loan
As you can see, there are several options for acquiring and using a bridge loan. Keep the information here in mind to see how this source of financing can be beneficial.
