Most CRE investors have experienced this situation:
- You’ve got a deal in front of you but your cash is tied up elsewhere.
- Maybe your current property hasn’t sold yet, or maybe your lender is dragging their feet.
- Maybe your balloon loan comes due before you’re ready to refinance.
What is a Bridge Loan?
A commercial bridge loan helps you move anyway. The best bridge loan lenders can give you short-term capital so you can close, renovate, or refinance without waiting for the perfect timing or being at the mercy of a traditional lender’s timeline. Need a bridge loan for investment property? They can help you seize the deal and sort out long-term financing later.
Yes, the rates are higher and so are the fees — but in return, you get speed and flexibility, which as you know are the two things that are often worth more than a lower interest rate when the window to act is short.
In this blog, we’re going in-depth on everything you need to know about bridge loans for real estate, such as:
- How do bridge loans work?
- Bridge loan requirements
- Bridge loan fees
- Best bridge loan rates,
- Bridge loan closing costs
- and of course, the pros and cons of bridge loans.
We’ll also talk about why Private Capital Investors is one of the best bridge loan lenders in the US today.
What’s a bridge loan in commercial real estate?
Timing is one of the most critical levers in commercial real estate because most deals don’t wait.
Sellers often impose short closing windows to meet 1031 exchange deadlines, clear expiring debt, or wrap transactions before quarter-end.
Competing buyers with access to capital act fast when they see undervalued assets or time-sensitive opportunities.
This may put you in a squeeze: You might need to close on a new property before your current one sells or lock in a deal before rates shift or another bidder steps in.
When the clock’s working against you, a commercial real estate bridge loan can literally “bridge” the gap and give you reliable capital, fast.
Commercial bridge loans supply immediate funding to keep time-sensitive deals alive.
They’re short-term by design (usually 6 to 24 months), and most let you make interest-only payments while you sort out leasing and renovations.
That breathing room gives you enough time to stabilize the asset before refinancing into a permanent loan.
How does a bridge loan work?
Bridge loans for real estate investors are customized to the transaction.
The best bridge loan lenders design the terms around what you need, whether that’s to acquire a development parcel, renovate a building, or refinance an upcoming maturity.
Rates and fees run higher than bank loans, but you get approval in weeks or even a few days (certainly not months).
The terms tend to be more flexible and bend more easily to situations that traditional lenders avoid, so you can use a commercial bridge loan when a property has vacancies or requires a lot of repair, and other such other factors that make banks hesitate.
Loan size depends on what the property is worth or what it will be worth.
For stable assets, short term bridge loan lenders calculate the maximum loan amount based on loan-to-value (LTV), typically between 65% and 80%.
If you’re planning upgrades, they may instead calculate it using loan-to-cost (LTC), which factors in renovation budgets and capital expenditures as part of the funding equation.
Related blog: How Bridge Loans can help You Purchase Commercial Real Estate
When to use a bridge loan
Private bridge loans solve problems that traditional financing can’t accommodate.
They help you act fast when there’s a deadline looming or when your permanent lender can’t or won’t move fast enough.
But they’re not always the right solution for every project. Here’s where this type of financing tends to work best:
Buying before someone else does
Say you’ve found a mixed-use property at a great price, but the seller insists on closing in 30 days.
The problem is that your bank (like most banks) needs twice that long just to underwrite.
A commercial bridge loan loan lets you close quickly and secure the property. You can then refinance later once permanent financing is ready.
Example: You spot a $10 million mixed-use building in downtown Chicago.
By securing an $8 million bridge loan within two weeks, you can move ahead of competing buyers and sign new tenants, and then refinance once rental income stabilizes.
Renovating or repositioning a property
Imagine buying a retail plaza with high vacancies and outdated features. Traditional lenders won’t finance it until the property is stabilized.
A commercial bridge loan gives you the capital to acquire the property and fund improvements so that you can re-lease it.
Once occupancy improves, you can refinance on stronger terms.
Example: You acquire a dated shopping center for $3 million and use another $500,000 from a bridge loan to update the roof, signage, and lighting. Within a year, you attract national tenants and refinance into a long-term loan at better rates.
Paying off maturing debt
Your commercial mortgage matures next month and the balloon payment is due.
The property is performing relatively well, but rising rates are causing delays in your refinance.
You can use a bridge loan to pay off the maturing debt and buy the time you need to arrange permanent financing without default.
Example: You have a $5 million loan coming due.
By securing a $5.2 million bridge loan, you clear the balloon payment and extend your timeline by six months, giving you breathing room to finalize a new long-term loan.
Finishing a project that’s almost done
You’re near the end of a development but short on cash for landscaping or tenant buildouts.
You can’t lease units or qualify for permanent financing without those final steps. A bridge gives you capital to finish and stabilize the property.
Example: You’ve completed most of a 120-unit apartment complex but still need $800,000 to finish interiors and secure occupancy permits.
You can take out a 12-month bridge loan for investment property to cover those costs, and once the building is leased, you can transition into a long-term loan.
Related blog: Common Use Cases of Commercial Bridge Loans
What sets bridge loans apart from traditional loans?
Speed is the biggest advantage of a short term bridge loan.
Traditional commercial mortgages involve lengthy underwriting, appraisals, and documentation, so they often take a few months to close.
Bridge loans for real estate investors can be approved and funded in weeks (or even days) especially if you work with private lenders that specialize on fast-moving CRE deals.
Of course, that speed comes with trade-offs in the form of higher interest rates (often 8% to 12% or more) and origination fees (between 1% and 3%). The loan terms are also shorter (6–24 months).
But that’s exactly how they’re meant to function.
Private bridge loans are designed for borrowers who plan to exit the loan quickly either by refinancing into a longer-term mortgage or selling the property once its value increases.
What do lenders want to see before funding your bridge loan?
Lenders will review your credit profile, but your credit score is not the deciding factor.
Bridge lenders care more about whether your project makes financial sense and whether you can follow through on how you plan to cover interest payments until the takeout financing is ready.
Exit plan
Lenders will want to see how and when you’ll pay them back. Are you planning to sell the property or refinance into a longer-term loan?
Do you want to stabilize the asset with tenants? You need a clear timeline and strategy to get approved.
Project numbers that hold up
Lenders want to see real numbers, which may include a working pro forma, solid rent rolls (if applicable), and clean financials that show how the property performs now and how it will perform later. If the math doesn’t work, the loan won’t either.
Relevant experience
Lenders will trust your plan more if you’ve successfully handled similar properties or projects before.
If you’re newer, you might need to show that you have a credible team or advisor helping you out.
Either way, the lender will want to see that you understand the work involved, especially if a lot of construction, lease-up absorption schedules, or repositioning capital expenditures are part of the deal.
Skin in the game
You’ll need equity because most lenders won’t cover 100% of the cost.
Expect to put in 20–35% in cash or built-up value in the property.
Some lenders may let you use other assets as collateral, but only if they’re confident in your fallback plan.
Ability to cover monthly payments
Bridge loans often require interest-only payments, but you need to show that you can keep up with those payments either through cash flow, reserves, or outside capital.
If there’s any doubt, the lender may set aside part of the loan in a reserve account to cover interest for the first few months.
Related blog: Does A Bridge Loan Affect Your Credit Score?
How do bridge loans stack up against traditional financing?
Bridge loans and traditional commercial mortgages serve different purposes and they come with different expectations.
Closing speed
Conventional loans take time. You’re looking at weeks of underwriting and appraisals, plus a lot of document back-and-forth.
That can stretch to 90 days or more. Bridge loans move so much faster (in under three weeks).
Loan approval criteria
Banks focus on tax returns and standardized ratios as well as your personal credit score as a borrower.
Bridge lenders look at the deal. Private bridge loan lenders still want documentation, but they will also weigh your business plan and your experience, as well as how you plan to repay the loan.
Does the project hold up and have you finished a renovation or repositioning of the same type before? That may matter more than your credit score.
Costs are higher (but so is the flexibility)
Expect to pay for speed. Interest rates often start at around 8% to 12%, and bridge loan fees (appraisal, origination, title) can also add to your total cost.
But that gives you almost instant access to funds, and you’re not locked into long-term obligations before the project is ready.
Broader use cases
Traditional lenders prefer low-risk deals (translation: fully leased properties with stable cash flow).
If your asset needs work or has vacancies, you probably won’t get far with a bank. Bridge lenders are more open to transitional properties especially when you have a clear plan to increase value.
No penalty for paying it off early
Most bridge loans don’t include prepayment penalties, so you can close out the loan without added costs if you refinance ahead of schedule or sell the property sooner than expected.
That makes these loans suitable for fast-turnaround CRE projects.
Weighing the pros and cons of commercial bridge loans
Bridge loans let you move on to deals that conventional financing can’t reach, but they are not the right tool for every project.
Understanding the trade-offs can help you decide whether this financing tool fits your project.
Why it makes sense to choose bridge loans
- You can move quickly – The seller wants to close in 30 days, but your bank is telling you it’ll take two or three months to finish underwriting. Meanwhile, other buyers are already circling. A short-term bridge loan can put funds in your hands in a matter of weeks, so you don’t have to watch someone else take that property.
- Terms aren’t set in stone – Traditional loans tend to have rigid maturities and fixed structures, giving you little room to strategize. Bridge loans allow you to negotiate. Some lenders are willing to adjust the length and payment structure, giving you the best bridge loan rates if you’ve got a strong plan.
- Early payoff isn’t penalized – Say you line up permanent financing earlier than expected or you decide to sell once the property hits the right value. No problem. You can pay off your bridge loan without worrying about prepayment penalties, so you have freedom on when and how you move on.
- Protect your cash while you stabilize – Because most payments are interest-only during the loan term, you can keep monthly costs down while you complete tenant improvements and/or lease up. Instead of draining your cash flow, you keep more working capital until the property is ready for long-term financing.
Related blog: Benefits & Risks of Bridge Financing in Private Equity
What to watch out for
- They cost more – Expect higher interest rates than a traditional mortgage. The cost of a bridge loan is often in the 8% to 12% range, and bridge loan fees can reach 2% or more. Those costs will eat into returns if your project drags or underperforms.
- You’re working against the clock – Bridge loans aren’t long-term. Most expire in 6 to 24 months, and the room for extensions is limited. You’ll face a balloon payment if you don’t refinance or sell in time. This is why you need a realistic exit strategy.
Related blog: Risks & Rewards of Bridge Loans
Things to look for in a commercial bridge loan for real estate
Speed and access should be built into the terms of the bridge loan. These two features are especially important:
- Ask exactly how long it takes to close. you need a lender that can move within your timeline if you’re buying a property or launching a renovation. The best bridge loan lenders close in under three weeks, but don’t assume. Confirm this upfront.
- Some bridge loans allow you to draw additional funds later (usually for capital improvements or leasing commissions). You only pay on what you’ve drawn instead of paying interest on the full loan amount from day one. This draw structure gives you more control over costs and keeps financing expenses tied to actual project needs.
Bridge loans give you capital when traditional financing is too slow or too rigid, but if you don’t have a solid exit plan or a clear handle on the numbers, things can unravel fast.
Used strategically, though, bridge loans can help you move first. Just make sure the deal works and that the clock doesn’t run out before you’re ready.
Private Capital Investors: The best commercial bridge loan lenders
Our team here at Private Capital Investors knows how commercial real estate deals work, so we’re able to design loan solutions — including bridge and mezzanine financing — that actually fit the realities of your timeline.
Are you interested in buying a foreclosed retail center in Houston or acquiring a lease-up property in Phoenix? Do you want to close fast on a value-add multifamily asset in Miami?
We can fund deals that traditional lenders reject or can’t move on quickly enough.
We extend commercial bridge loans for a wide range of transaction types:
- Quick close acquisitions when the seller won’t wait
- Properties with a rehab component, from cosmetic upgrades to full repositioning
- Debt buy-backs that require fresh equity
- Non-stabilized or non-cash flowing properties (including pre-leased assets in strong markets)
- Foreign national transactions where conventional financing is unavailable
- Luxury residential and completed new construction deals that need interim funding
From multifamily and mixed-use buildings to self-storage, retail, urban land, hospitality, and light industrial, we know how to underwrite the potential and not just the numbers on paper.
We serve borrowers in Phoenix, Denver, Dallas, Miami, Houston, Florida, Atlanta, Massachusetts, and Illinois, and we’re ready to fund across other major US markets as well.
Need fast, flexible capital? We approve loans in as little as 24 to 48 hours, with funding in as few as 14 days. Rates start at 5.99%, and we don’t require tax returns or financials — just a strong deal and a clear plan.
Reach us today at 972-865-6206 or email info@privatecapitalinvestors.com to get started.
