A bridge loan is
an immediate, short-term loan, one to sixty months, usually
made in anticipation of intermediate or long-term financing.
You pay back the bridge when permanent financing is in place
with no pre-payment penalties.
Bridge loans "bridge"
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 LOAN LENDERS
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.
BRIDGE LOAN GUIDELINES
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