Introduction – What Bridge Loans Are & Why They Matter 

Purpose: To give you a solid foundation – what a bridge loan is, why it exists, and when it’s appropriate in real estate. 

Bridge loans are short-term, interest-only loans that “bridge” the gap from acquisition or repositioning to permanent financing or sale. They’re especially useful when timing is critical or when long-term debt isn’t yet available. 

Typical Terms & Deal Parameters 

Purpose: To set expectations – here’s what you’ll see in market for terms, leverage, and structure. 

Common parameters in U.S. CRE bridge loans include: 

– Terms: 12-36 months (often with extensions) 

– Interest: Typically 8-12% 

– Amortization: Interest-only 

– LTV/LTC: Up to ~75% / ~85% on value-add deals 

– Recourse: Varies by lender 

– Prepayment: May have minimum interest or yield maintenance 

Financing Costs – What You Should Budget 

Purpose: To break down true cost of capital so you can compare offers and evaluate deal feasibility. 

Expect (approximate ranges): 

– Interest Rates: 8%-12% 

– Origination Fees: 1%-3% 

– Broker Fees: 1%-2% 

– Exit / Prepayment: 0%-1% 

– Legal / Title / Third-Party Costs: $10K-$50K+ 

Appraisal & Reports: $5K-$20K 

– Reserves: Capex, interest, and operating reserves may be required 

– Total Soft Costs: 3%-7% of loan amount 

Capital Source Variations – How Lenders Differ 

Purpose: Understanding who you’re borrowing from helps you tailor your deal and timeline. 

| Lender Type | Key Traits | Timelines | Best For | 

| Banks | Lower rates (7% -9%), conservative underwriting, prefer stabilized or near-stabilized deals | 30-60 days | Strong borrowers with clean financials and cash-flowing assets | 

| Private Debt Funds | Flexible underwriting, higher leverage, quick draw structure, may allow non-recourse | 10-30 days | Value-add projects, fast close needs, light construction | 

| Hard Money Lenders | High rates (10%-14%+), minimal underwriting, very fast | 5-14 days | Time-sensitive deals, credit-challenged borrowers, unique assets | 

| Credit Unions / CDFIs | Community-focused, relationship-driven, lower fees | 30-45 days | Smaller balance loans in local/regional markets | 

| Private Equity / Family Offices | Strategic capital partners, backend participation, high leverage or equity hybrid | 15-45 days | Larger deals, experienced sponsors, creative structures | 

| Marketplaces | Aggregator of multiple lenders, automated prequal | 5-15 days | Access to multiple options, small  balance deals 

Asset Class Deep Dive 

Purpose: Help readers understand how bridge financing is used differently across CRE asset classes and how lender appetite shifts accordingly. 

– Multifamily: Lease-up, repositioning – High appetite 

– Office: Re-tenanting, conversion – High scrutiny post-COVID 

– Retail: Value-add strip centers – Varies greatly by location 

– Industrial: Quick close / expansion – Strong demand = favorable terms 

– Hospitality: Reflag, improve NOI – Tougher unless experienced borrower 

– Medical / MOB: Rehab, lease-up – Stronger deals if near hospitals 

– Land: Entitlement bridge – Needs strong exit strategy 

Borrower Profile – Who Lenders Want 

Purpose: Set realistic expectations for borrower qualifications and help clients assess their readiness before engaging lenders. 

Typical expectations: 

– Experience with similar assets 

– Credit scores ~650+ (flexible by lender) 

– Liquidity equal to ~10%-20% of project cost 

– Net worth at or above loan size 

– Entity Structure: LLC preferred; clean organizational structure 

– Sponsor Resume: Relevant project experience 

– Tax Compliance: No unresolved tax liens or bankruptcies 

– Track Record with Exit Strategies: Prior successful refinances or dispositions 

Documentation & Requirements 

Purpose: Reduce surprises by helping borrowers prepare everything lenders will ask for during origination and underwriting. 

Initial Application Package: 

– Executive Summary / Deal Overview 

– Purchase Agreement (if applicable) 

– Rent Roll and T–12 

– Project Budget / CapEx Schedule 

– Exit strategy description 

– Sponsor resume & track record 

Personal Financial Statement (PFS) 

– Bank statements 

– Credit report authorization 

Underwriting Phase: 

– Appraisal, Phase I Environmental, PCA 

– Title commitment 

– Borrowing entity docs (LLC, EIN, etc.) 

Organizational chart 

– Liquidity proof: 3-6 months bank statements 

– Construction schedule (if applicable) 

Pre-Due Diligence & Fraud Protection 

Purpose: Educate borrowers on how to vet lenders and avoid fraud – a growing risk in private lending. 

Before engaging a lender, follow these best practices: 

– Google their name + “scam” or “fraud” 

– Never pay large “application fees” upfront 

– Check if they’re a licensed lender or registered fund 

– Ask for a track record, case studies, or client referrals 

– Use a transactional attorney to review term sheets and commitments 

– Watch for red flags like over-promising terms or vague approvals 

– Consider using a reputable CRE financing broker 

Underwriting Criteria – What Makes or Breaks a Deal

Purpose: Offer insight into the lender’s lens so borrowers can proactively structure stronger, more fundable deals. 

Lenders assess: 

– Clear and credible exit strategy (sale or refinance) 

– Strength of sponsor (track record and liquidity) 

– Valid and detailed CapEx plan 

– Local market strength and demand 

– Loan basis (price per square foot or unit vs. comps) 

– Legal, zoning, or title issues 

– Realistic ARVs and stabilization timelines 

– Borrower’s experience with similar assets or business plans 

Pitfalls to Avoid 

Purpose: Warn borrowers about common mistakes that cause deals to collapse – especially for first-time or fast-moving developers. 

– Overestimating future value or income 

– Underestimating CapEx or rehab timelines 

– Choosing speed over structure (bad lender fit) 

– Failing to document liquidity and experience 

– Weak or unclear exit strategy 

– Missing title or permitting problems 

Getting locked into expensive extension fees 

– Not negotiating interest reserves or draw terms 

– Assuming you’ll refi with agency debt too early 

– Engaging the wrong lender type for your asset or strategy 

Real–World Case Study 

Purpose: Reinforce key concepts with a practical, real-world example. 

Deal: 30-unit C-class multifamily in Charlotte, NC 

Borrower: Experienced sponsor, 3 prior flips 

Loan: $2.1M bridge loan from private lender (75% LTC) 

Use: $250K CapEx for unit upgrades & curb appeal 

Exit: DSCR refi after 10 months to agency debt 

Cost: 9.25% interest, 2 points origination, $35K in soft costs Outcome: NOI increase led to $2.8M valuation at refi 

Call to Action – Why a CRE Broker Matters 

Purpose: Encourage engagement and clearly explain how a professional broker adds massive value. 

Have a transitional CRE deal? Submit it for review or schedule a consult to discuss bridge financing options. 

Why Use a Reputable CRE Financing Broker? 

– Brokers have access to curated lender networks and know how to match you to the right capital source 

They pre-underwrite your deal to improve approval odds 

– Brokers can negotiate better terms, reduce junk fees, and catch bad faith clauses in term sheets 

– They save you weeks of back-and-forth by organizing the deal package and managing lender communications 

– A great broker protects you from fraudulent or unqualified lenders, especially in the private market 

Next Issue: DSCR Loans for Long-Term Rentals – Financing Based on Cash Flow, Not Tax Returns