What You Need To Know About Commercial Bridging Loans

By Author: William Brewer
Total Articles: 6
Comment this article

Are you looking for information about securing a commercial bridging loan?

Sometimes, being able to secure short-term financing before a permanent source is acquired can be a life- and/or business-saving milestone.

And that’s exactly where a commercial bridging loan comes into play...

“What Is A Commercial Bridging Loan?”

A commercial bridging loan (also known as interim financing, gap financing, and a “swing loan”) is a short-term loan that an individual or company can use until a definite/permanent source of financing is found.

When you have things in your life or business that need immediate attention, a CBL allows you to take care of your obligations by providing you with immediate cash flow.

In other words, a CBL gets its names from the fact that it “bridges the gap” between you and permanent commercial financing.

“What’s The Interest Like For A Commercial Bridging Loan?”

Typically, a CBL is considered to have high interest rates and are backed with some form of collateral (such as real estate).

As you might have already guessed, ...
... this is because those who borrow through a commercial bridging loan are typically a higher-risk borrower.

Still, when you’re waiting to secure permanent financing, such as business equipment financing, the higher interest may be worth it in the long-run.

“What Are The Pros Of Getting A Commercial Bridging Loan?”

In real estate...

1. Bridge loans are frequently used by borrowers who want to use the funds from the sale of their current home to use as a portion (sometimes all) the down payment on a new residence.

2. Most contemporary fixed-rate mortgages won’t allow you to recast your new home’s mortgage payment and would therefore leave you with the higher payments for many years.

In corporate financing...

1. Commercial bridging loans can be used to inject small portions of capital to carry a company forward, so that it doesn’t run out of money between financings.

2. They can be used as a final debt financing before a business is publicly offered and/or acquired.

“What Are The Cons Of Getting A Commercial Bridging Loan?”

The downside of a CBL is that if a market is slow (in regard to real estate), you will be required to make two mortgage payments while paying the accruing interest on a third.

Additionally, if your property doesn’t sell within the year (remember: commercial bridging loans are short-term), you will be repaying the bridge loan, too.

“How Do I Apply For A Commercial Bridging Loan?”

To apply for a bridge loan, you’ll first need to prove you are financially stable enough to pay everything that the loan entails.

In the real estate example, that means you would need to be able to handle paying both mortgages if your property doesn’t sell in the first year.

In most cases, you don’t need to make any payments for the first several months of your new bridge loan. However, it’s important to know that your interest will still accrue.

Need More Guidance About Getting A Commercial Bridging Loan?

If you feel a commercial bridging loan is right for you and you would like more help in getting what you need, please contact IBF Commercial Finance for a free, no-obligation consultation today.

William Brewer is the founder and CEO of Industrial & Builders Finance, LLC., a company that helps business owners with any credit status find the capital they need to start, grow, and expand their business. Bill and his experienced team can help you get money for your business, the fast and easy way. Visit http://ibfcommercialloans.com to learn more about how you can get financing for your business today.