Bridge Loans for Commercial Real Estate: The Complete Guide

Bridge loans are one of the most versatile tools in commercial real estate financing. Whether you are acquiring a value-add property, repositioning an asset, or simply need to close quickly before lining up permanent financing, a CRE bridge loan can provide the speed and flexibility that traditional bank lending cannot match.

What Is a Bridge Loan in Commercial Real Estate?

A bridge loan is a short-term financing solution designed to “bridge” the gap between a current need for capital and a longer-term financing event. In commercial real estate, bridge loans are typically used when a borrower needs to close quickly, the property does not yet qualify for conventional financing, or the borrower plans to stabilize the asset before refinancing into a permanent loan.

Unlike traditional bank loans that can take 60 to 90 days to close, bridge loans can fund in as little as 7 to 14 business days. This speed makes them essential for competitive acquisitions and time-sensitive transactions.

When to Use a Bridge Loan

Bridge loans are ideal in several common CRE scenarios:

• Acquisitions with tight timelines — when the seller requires a fast close and traditional financing is too slow.
• Value-add repositioning — purchasing a property that needs renovations or lease-up before it qualifies for permanent debt.
• Loan maturity payoffs — when an existing loan is maturing and the property is not yet stabilized enough for a conventional refinance.
• Capital recycling — pulling equity out of one property to deploy into a new acquisition while arranging long-term financing.
• Distressed acquisitions — buying foreclosures, REO, or properties with title or occupancy issues that banks will not touch.

Typical Bridge Loan Terms

While terms vary by lender and deal quality, here are the ranges you can expect for a commercial real estate bridge loan:

• Interest rates: 8% to 12%, typically floating over a reference rate (SOFR or Prime).
• Loan term: 12 to 24 months, with extension options available on many programs.
• Loan-to-value (LTV): Up to 70% to 75% of the as-is value, and up to 80% to 85% of cost on some programs.
• Origination fees: 1% to 2% of the loan amount.
• Payments: Interest-only during the loan term.
• Prepayment: Often no prepayment penalty, or a short lockout period (3 to 6 months).
• Minimum loan amount: Typically $1M and up for commercial programs.

How to Qualify for a CRE Bridge Loan

Bridge lenders focus primarily on the asset and the exit strategy, rather than the borrower’s personal income. Key qualification factors include:

• Property value and condition — lenders will order an appraisal or use an internal valuation.
• Exit strategy — a clear, realistic plan to repay the bridge loan (sale, refinance, or stabilization).
• Borrower experience — lenders want to see a track record of similar projects, though some programs accept less-experienced borrowers.
• Liquidity — adequate reserves to cover interest payments and any planned capital expenditures.
• Credit score — generally 650+ for most bridge lenders, though requirements vary.

Pros and Cons of Bridge Loans

Advantages

• Speed — close in days, not months
• Flexibility — creative structures, interest-only payments
• Asset-focused — less emphasis on personal income
• No prepayment penalty on many programs
• Enables deals that traditional lenders will not finance

Disadvantages

• Higher interest rates than permanent financing
• Short term creates refinance or exit risk
• Origination fees add to total cost
• Some lenders require personal guarantees

How to Get a Bridge Loan Through Passy Capital

At Passy Capital, we specialize in structuring and placing bridge loans for commercial real estate investors and operators. Our process is straightforward:

1. Submit your deal — our intake form takes about 2 minutes.
2. We shop your deal across our lender network and present the best terms within 24 hours.
3. We guide you from term sheet through underwriting to closing.

Use our loan calculator to estimate monthly payments, or submit a deal to get started today.