Top 8 Commercial Bridge Lenders: Work With the Best

For businesses or individuals wanting to renovate or purchase commercial real estate, long-term financing options may not provide the reasonable rates they’re looking for. That’s because a strip mall might need to be refurbished before a bank is willing to write a traditional mortgage. Or maybe a buyer needs to act fast to secure a desirable loan with low interest rates.

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In these unique circumstances, a commercial bridge loan can open the doors to immense opportunities for investors. However, there is no perfect bridge lender for everyone. By the end of this article, you will have a clearer understanding of what a commercial real estate bridge loan is, common uses for these loans, bridge loan pros and cons, leading bridge lenders, and whether this financing product can benefit your ventures.

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What Is a Commercial Real Estate Bridge Loan?

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A commercial real estate bridge loan, also known as gap funding or a gap loan, is a short-term financing option intended to tide over a borrower during a temporary cash crunch. The bridge loan, as the name suggests, helps the business get from one stage to the next, including setting up a long-term mortgage or selling a property to pay off the bridge loan.

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While the actual terms for a bridge loan can vary greatly, they will generally fall within these ranges:

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• Fees: 1% to 2% of the loan amount

• Interest rates: 6% to 12%

• Lender: Private debt funds, traditional banks, or government agency lenders

• Payments: Interest-only monthly with a balloon payment at maturity

• Terms: 12 to 36 months

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Some of the biggest benefits of a commercial real estate bridge loan include:

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• Fast and flexible financing options

• Does not require personal guarantees, making these loans less risky for borrowers

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“Sometimes a deal has very few options and the only viable option is a bridge loan,” said Rob Beardsley, Principal at Lone Star Capital. “For instance, if a property is not stabilized, or not 90% occupied for 90 days, your financing options are more limited. For a non-resource option, a bridge loan is the only way to go. Businesses can also get their renovation budgets funded by a bridge loan lender. These loans are more flexible and can be tailored to your individual needs.”

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Unfortunately, bridge loans are not without their risks. Bridge loans can be more expensive than traditional financing options. Additionally, the value-add activities must be completed in a short span of time. Borrowers also need to be wary of bridge loans that seem too good to be true. Some types of commercial bridge loan scams include up-front-fee and bait-and-switch scams.

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Common Uses for Commercial Bridge Loans

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There are several unique scenarios where a commercial real estate investor might decide to apply for a bridge loan, including:

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• The property isn’t producing income

• When the property is not considered to be stabilized

• An investor is buying and flipping a property

• If a borrower is temporarily unable to secure a mortgage with good terms

• A would-be property buyer wants to close a deal right away and needs money too quickly for favorable long-term financing to be arranged

• When a traditional lender falls through at the last minute

• Financing won’t come through for a few months or more

• An investor has plans to renovate a property

• An investor wants to redevelop a historic property to make it more valuable

• A borrower wants to buy raw land and build a new building they would sell later down the road

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8 Top Commercial Real Estate Bridge Loan Lenders

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Looking for a quality commercial bridge lender? Here are eight top bridge loan lenders for commercial real estate investors.

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1. PNC Bank

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As the seventh largest bank in the United States, PNC is a trusted source for commercial real estate bridge loans. A PNC bridge loan can be used to purchase or refinance an owner-occupied commercial property and offers fixed or variable rates. Terms are up to 180 months, with a 20-year amortization. Borrowers can obtain loans ranging from $100,001 to $3 million.

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2. AVANA Capital

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AVANA Capital provides commercial real estate investors with flexible bridge loan options built around their time-sensitive needs. Borrowers that are in need of intermediate financing can receive up to 75% of the as-is value of their purchase within 12 to 36 months. AVANA Capital’s bridge loan interest rates fall between 6% and 11%.

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3. Commercial Loan Direct

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Commercial Loan Debt offers 200 different loan products to investors nationwide. Their terms and rates are competitive with those of traditional banks, and borrowers can apply for a loan from the comfort of their own homes. Commercial Loan Debt’s average starting rates for investment mortgages are 1.94% to 10.99%. Their bridge loan terms are for 36 months. Investors can borrow between $1 million and $5 million.

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4. Bloomfield Capital

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Bloomfield Capital is a commercial real estate financing company that offers loan amounts ranging from $2 million up to $20 million. Their rates range from 8% to 11%, and their terms are from six months to three years.

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5. Arbor

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Arbor is a nationwide commercial lender that provides numerous mortgage loan options, including commercial bridge loans. Their loans can be a good product for investors that aren’t sure if 36 months is enough time to complete a redevelopment project, as extension options are available. Arbor offers interest rates as low as 6.5% and loan amounts starting at $8 million.

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6. Socotra Capital

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Socotra Capital is a financing company that provides bridge loans ranging from $100,000 to $12 million with loan terms ranging from six months to 20 years. Their interest rates start at 6.99%. Loans are available to businesses, individuals, trusts and limited partnerships.

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7. Clopton Capital

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This commercial mortgage broker offers bridge loans ranging from $1 million up to $100 million. Their loans have fixed and floating rates, starting at L + 250, with 60-month initial terms and extensions.

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Commercial Bridge Loan FAQs

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Now that you know who the top commercial real estate bridge lenders are, let’s dive into the three most commonly asked questions about this type of loan.

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What is the average interest rate on a bridge loan?

The average interest rate for commercial real estate bridge loans ranges from 6% to 12%.

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What banks offer bridge loans?

Bridge loans are typically offered by the commercial property branch of major banks and credit unions. You can also obtain a bridge loan through private money lenders.

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What credit score is needed for a bridge loan?

You need a credit score of 650 and above to qualify for a bridge loan.

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Is a Commercial Bridge Loan Right for You?

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If you are a commercial real estate investor who needs funds fast for a property that isn’t currently stabilized or one that you’re planning to redevelop, a bridge loan could be a great option for you. Always shop around to find bridge lenders with favorable interest rates that cater to your budget.