This article is part of a larger series on Business Financing.
Commercial bridge loans provide short-term financing for the purchase of commercial real estate and additional funds for the rehabilitation of a property. While there’s flexibility in commercial bridge loans, they aren’t permanent financing. In addition to funding renovations and upgrades, a commercial bridge loan can be used by borrowers who cannot initially qualify for permanent financing.
Commercial bridge loans can be obtained from local or regional banks or online lenders. Listed below are the four best options from which to choose.
AVANA Capital is a direct lender that provides commercial bridge loans, construction loans, and SBA 504 loans. Loans through AVANA range between $3 million and $25 million. Preapproval is promised on its website in as few as three days.
While the turnaround time usually falls between 45 and 60 days, it can be as little as 10 to 30 days. AVANA has provided commercial bridge loans to industries, such as hospitality, owner-occupied real estate, and renewable energy, among others.
We like AVANA due to the high maximum loan amount, competitive rates, and quick preapproval and turnaround time.
Available nationwide in all states besides Nevada and California, Bloomfield Capital provides commercial bridge loans of up to $20 million. The longer repayment period is attractive to potential borrowers, with up to three years to either sell or refinance the loan.
Bloomfield offers many uses for funding, including highly structured transactions, discounted note payoffs, property acquisitions, recapitalizations, rehabilitation, lease-up, partner buy-out, and more. Bloomfield positions itself as a strong choice for urgent funding needs.
Arbor is another nationwide lender that offers a variety of mortgage loan products, including commercial bridge loans. It’s an attractive option for businesses that aren’t sure that 36 months will be enough time to complete a project, as extension options are available. With rates as low as 6.5%, Arbor offers some of the best rates on the market.
Some fees could be waived if permanent financing is also secured through Arbor. One advantage Arbor has over the other lenders listed here is with nonrecourse loans. This means the borrower isn’t personally liable for the loan, so personal taxes likely won’t be required. However, a personal credit score of at least 680 may be required to show the borrower’s ability to secure permanent financing.
Unlike the other options listed here, C-Loans.com isn’t an individual lender but rather a broker that uses as many as 750 lenders to secure the best commercial bridge loan option for the borrower. The terms listed here are guidelines for what a borrower will find through C-Loans.com. Still, with so many lenders, the ultimate terms will be determined by how well qualified the business is and the circumstances of the property purchase.
Extensive documentation is required when using C-Loans.com so the loan can be shopped around to as many lenders as possible. However, because of this, well-qualified borrowers may find better terms than from the three independent lenders listed.
How We Evaluated the Commercial Bridge Loan Providers
When evaluating commercial bridge loan providers, we considered the minimum and maximum loan amounts, the potential interest rates, and the turnaround time for both approval and loan closing. Some lenders offer nonrecourse lending, which is advantageous because it removes the repayment liability from the individual borrower. General qualifications only differ slightly between the four options listed, so the borrower should consider what factors are most important before applying.
A commercial bridge loan is an excellent lending product for businesses looking to purchase and renovate a property. Depending on the desired repayment term, the amount desired, and the long-term plan for the property, each of the four lending options listed above have terms that might fit one business better than another.