How does a bridge loan work?
Bridge loans usually bridge the gap during times when financing is needed but not yet available. How does bridge loan financing work?
Bridge loans provide immediate cash flow and usually require some form of collateral such as real estate or inventory.
Bridge loans are the best solution for immediate capitalization on a timely acquisition or business opportunity.
They allow for quick action by clients and can be used for acquisition, buy-outs, foreclosures, cash out and construction.
Both large or medium sized corporations and individuals use bridge loans. Lenders often customize bridge loans for many different types of situations.
Bridge loans have a faster application, approval, and funding process than traditional loans. However, the loans tend to have relatively short term, high interest rates, and large origination fees.
WHO USES BRIDGE LOANS?
A company doing a round of equity financing expected to close in 6 months, may opt for a bridge loan.
The bridge loan may provide working capital to cover the company payroll, rent, utilities, inventory costs, and other expenses until the closing of the equity funding round.
If a buyer has a lag between the purchase of one property and the sale of another property, they may turn to a bridge loan.
Lenders only offer real estate bridge loans worth 80% of the combined value of the two properties.
The borrower must have significant home equity in the original property or cash savings on hand.
HOW TO GET A BRIDGE LOAN
We have USA national and private bridge loan lenders available to meet our clients needs.
They specialize in creative short-term bridge loan solutions for qualified clients who have an urgent need for funding.
Simply tell us of your interest and how much you need and we will help you get a bridge loan.
- Funding range: from USD $3 million to USD $50 million
- Funding duration: within 30 days of the receipt of an executed letter of interest
- Underwriting: up to 90% financing, dependent upon the situation and property type.
- Loan term: for 1 month to 12 months (extensions are possible; up to 36 months, with extension options incorporating rate step-ups and extension fees).
- Interest rates: floating rate over Prime or LIBOR (dependent upon property type, cash flow predictability, rollover, sponsorship, loan-to-value, debt service coverage, nature of the security interest, and potential exit strategies).
WHAT CAN YOU FINANCE USING A BRIDGE LOAN?
Bridge loans can be used to finance;
- Business expansion or restructuring
- Foreclosures and foreclosure avoidance
- Partnership disputes; partner or equity buyouts, judgment payoff
- Rehabilitation and renovations
- Tax lien payoff
- Bankruptcy resolutions
- Debt restructuring
- Bank workouts
- Business merger and acquisitions
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