In one sentence
Short-term financing that carries a property through a transition, repaid by a sale or permanent refinancing.
The longer version
Bridge loans fund acquisition, repositioning, or lease-up over one to three years, priced for the higher risk and floating over a benchmark. They bridge to a permanent loan or a sale.
Bridge closings move fast and lean on extension options and interest reserves, and their exit assumptions get real scrutiny because the whole thesis depends on the takeout.
Common questions
- What is a bridge loan in commercial real estate?
- Short-term, usually floating-rate financing that carries a property through a transition such as lease-up or renovation, repaid by a sale or permanent refinancing.
- Who makes bridge loans?
- Debt funds, mortgage REITs, some banks and specialty lenders, often financing their own loans through warehouse or repo facilities.
- What are the risks of a bridge loan?
- That the business plan takes longer than the term, rates rise, or the property does not reach the income needed to refinance. Extension options and rate caps are the usual protections.
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