bridge loan is an immediate, short-term loan, one
to sixty months, usually made in anticipation of intermediate
or long-term financing. Pay back the bridge when permanent
financing is in place with no prepayment penalties
loans "bridges" two different types of cash
gaps. The first "bridge" is a loan that
institutional banks refuse to approve. The second
"bridge" is for the individual investor
or company who is between deals and requires immediate,
short-term funding until a traditional loan is issued.
Bridge lenders only use private capital. "Loan
Committees" are comprised of one or more principals.
This creates an efficient and expeditious decision-making
atmosphere that enable lenders to quickly perform
their due diligence and fund loans as quickly as in
seven business days.
An owner of a $2,600,000 office building in excellent
condition, with a good positive cash flow, needs $800,000
to pay the IRS within 15 days. He is willing to sell
this property for $800,000 down to pay off the IRS.
The prospective buyer is property rich but cash poor,
and cannot raise this amount of cash within this time
period through conventional means. To take advantage
of this very narrow window of investment opportunity,
the buyer obtains the $800,000 bridge loan within
10 days to quickly secure property title. The buyer
then paid back the $850,000 within 30 days with no
prepayment penalties when loans from conventional
sources came through.
Loan Amounts: $250,000 to $35,000,000 in all 50 states
and some foreign countries. Credit Ratings: Will consider
any credit rating: A+ to D, including bankruptcy.
Amount of Loan: Up to 65% of property value. Minimum
Down Payment: As little as 5% or 10% if seller carries
a second mortgage. Terms: 400 plus basis points over
corresponding U.S. Treasury index. This is subject
to credit rating, location, type and condition of
property. Loan Quote: 2 business days or less. Speed
of Loan: Loans are issued as quickly as 7 days