What you need to know: There are many use cases for a commercial property bridge loan, but it’s mainly used for acquiring a property before its income or condition is strong enough for a long-term loan. Private Capital Investors currently provides bridge financing with rates starting at 5.99%, up to 85% LTV, and funding in as little as 14 days.
Many deals worth pursuing in commercial real estate are time-sensitive. They’re listed below comparable properties because the seller wants to close right away. Having access to a bridge loan lender is the best way to meet the seller’s deadline. This type of financing lets you close within a two- or three-week deadline and arrange longer-term financing afterward.
What are the steps to buy commercial real estate with a bridge loan?
Here’s what the process looks like from purchase to exit:
Buy with bridge financing → operate or improve the property → refinance or sell → repay the bridge loan
When you find a property you’re ready to pursue, you go to a lender and apply for bridge financing. The lender then checks whether the property provides enough security for the loan and whether your refinance or sale can repay it on time.
If you are approved, the loan closes, and you take ownership of the property. You can then begin working toward the exit you described in your financing plan.
Example of a bridge-to-permanent financing timeline
Suppose you agree to buy an $8 million shopping center that is 78% occupied. The seller wants to close within 30 days, but your bank needs at least 60 days for underwriting. And because of the low occupancy rate, you may not be able to secure permanent financing yet. Here’s how a bridge loan can get you from point A to B.
Day 1: You sign the purchase contract
You send the bridge lender the purchase price, requested loan amount, rent roll, and property financials.
You also explain how you plan to repay the bridge loan.
Days 2 to 14: The lender underwrites the deal
Suppose the lender approves a $6 million loan, equal to 75% LTV. You provide the remaining equity and closing costs.
Day 18: You buy the property
The commercial real estate bridge loan lender funds the acquisition, and you take ownership of the property. From that point, you begin making payments on the bridge loan. If it is interest-only, those payments cover interest without reducing the $6 million principal.
Months 1–6: You lease the vacant space
Use the next several months to fill the vacant units and raise NOI. As income improves, check whether the property now meets the permanent lender’s DSCR requirement so you can start the refinancing process.
Month 8: You refinance
The permanent lender funds the new loan, and you use those proceeds to pay off the $6 million bridge loan in full. The bridge lender then releases its lien, and you continue financing the property under the new long-term loan.
How much can you borrow?
Here at Private Capital Investors, our commercial real estate loans go up to 85% LTV, meaning we can finance up to 85% of the property’s value.
So if the property you want to acquire costs $10 million:
$10,000,000 × 85% = $8,500,000
You will need to fund the equity portion of $1,500,000 plus applicable closing costs.
Note that 85% is the published maximum. It’s not the LTV for every deal. To find out exactly how much we can lend you, send us your loan request.
Tip: Decide how much to borrow
Just because a lender lets you borrow up to a certain limit doesn’t mean you need to take the maximum. A larger loan means higher monthly interest payments, which can become harder to carry if the property takes longer than expected to stabilize.
You may keep more cash at closing, but those higher payments can gradually reduce the liquidity you need to cover operating losses until the property produces steady income.
Can a bridge loan help with a competitive commercial property purchase?
Yes. Say you agree to buy a commercial property for $6 million. The seller wants to close within 21 days, but your bank needs at least 60 days to complete underwriting. You could lose the property if you wait.
In this case, you can go to a bridge lender known for fast closings, like Private Capital Investors. We’re able to fund eligible deals in as little as 14 days.
Can you use a bridge loan at a commercial property auction?
Yes, especially if you have a good relationship with a direct lender who can quickly review and approve your bridge loan application.
Auction purchases can make financing especially difficult because the closing deadline usually begins as soon as you win. The safest approach is to line up the financing before the auction starts.
- Discuss financing with your lender before bidding on any commercial property. Estimate how much you can borrow and how much cash you will need to cover the equity requirement.
- Submit the final purchase documents when you win the auction. Let the lender know the exact price and closing date.
- Close with the bridge loan. You contribute the required equity and the lender funds the remaining approved amount.
Before you bid, make sure you have a realistic financing plan. Once you win, the auction may give you only a short window to pay the balance. If your lender then refuses the loan, you may not have enough time to arrange replacement financing.
Can you use bridge financing to buy an unstabilized property?
Yes. Suppose you want to buy a $10 million multifamily property that is only 65% occupied.
Permanent lenders will likely be reluctant to finance the deal because the occupancy and/or NOI is too low.
You can take out a bridge loan in the meantime to finance the acquisition and give you the leeway you need to lease the vacant units.
Once you’ve raised occupancy and NOI high enough to meet your bank’s underwriting requirements, you refinance and use the new loan to repay the bridge balance.
Can you use a bridge loan to buy a larger commercial property before selling your current one?
Absolutely. Suppose your company owns a 40,000-square-foot warehouse but now needs to expand to an 80,000-square-foot facility. You’ve already found the new building but can’t free up enough cash to close because your old warehouse hasn’t sold.
You can buy the new property first with a bridge loan. This lets you relocate your operations right away and gives you time to market the old warehouse properly. Once it sells, you may use the sale proceeds to repay the bridge loan. You can also refinance the new property into permanent debt.
What happens if you aren’t able to refinance right away?
This is the main risk of buying with bridge financing.
Especially in the current market environment, lease-up can often take longer. Your exit may take longer than planned because the property doesn’t sell on schedule or still doesn’t qualify for the permanent loan.
Meanwhile, interest continues to accrue. The bridge loan has an interest-only structure, so all the payments you make don’t reduce the principal balance.
This is why it’s important to check whether the bridge loan includes an extension option and what it would cost. Do this before you accept the loan terms.
More importantly, it’s prudent to build your timeline around the most defensible point when the property is likely to qualify for the planned exit. Don’t pin your entire repayment plan on the earliest possible date everything could go right.
What if your permanent financing is already in progress?
You may already have a bank willing to finance the property but unable to close before the purchase deadline. In that case, the bridge loan can cover the period between the acquisition and the permanent loan closing.
Say the seller requires you to close within 20 days. Your bridge loan closes on day 18, allowing you to complete the purchase on time. Two months later, your bank finishes underwriting and funds the permanent loan. You then use those proceeds to repay the bridge loan and continue financing the property under the new long-term loan.
The property does not need renovation or lease-up in this scenario. You are using the bridge loan simply because the seller’s deadline arrives before your permanent lender is ready to close.
What does a commercial bridge loan cost in 2026?
Our commercial bridge loan rates start at 5.99%. Standard bridge closing costs are approximately 2% to 4% of the loan amount.
If you expect to repay the bridge loan after six months, work out how much you will actually pay during those six months, including interest and closing fees. That gives you a better comparison than looking at the interest rate alone.
For more clarification, read our detailed blog on the topic: Bridge Loan Explained
Talk to us here at Private Capital Investors if you want to know what bridge financing would cost for your deal. Because we understand CRE and have been financing commercial properties for decades, we can advise you on whether a bridge loan is the right tool for the acquisition you’re considering.
