SBA Bridge Loan
A SBA bridge loan is the opportune loan for business owners that are attempting to purchase commercial real estate. These types of real estate land transactions require down payments that help to secure the properties before a bank’s full loan is accepted. However, when short-term cash is necessary to cover interim shortfalls in funds, a bridge loan is the ideal loan.
A SBA bridge loan is also perfect for paying off interim loans, such as tax liens, business assets or delinquent tax notes. Since taxes and liens will not wait for a loan, a SBA bridge loan is often less expensive than paying expensive penalties.
SBA bridge loans are funded through intermediary lenders, instead of directly to small businesses. This helps reduce lender’s overall risks, allowing them to loan money in situations that could otherwise result in declined loan requests. These types of loans help to expand small businesses and boost local economies.
A bridge loan is designed to cover any short-term capital needs while businesses or investors wait for a full loan to fund. When the full loan funds, the borrower can then use the funds to pay back the bridge loan along with any points or interest incurred. The remainder of the loan is then used for the specified purpose, such as funding real estate, etc. These types of interim funding often save many businesses from experiencing unnecessary financial harm and damage.
A SBA bridge loan is more expensive than traditional financing options, as it is a short-term business capital option. Bridge funding is designed to work when other financing has already been committed to. Some bridge funding is subject to lender requirements. Higher risk levels may require equity shares for lenders, which are returned when the loan is repaid or the company is sold.
Bridge loans are generally low risk and have short to medium loan terms. They are given to companies that have superb commercial property collateral and since they close quickly, the situation demands that companies have the securities to guarantee their backup positions.
Most lenders understand that commercial real estate financing often experiences bumpy roads and financing can frequently fall through. Bridge loans are very valuable in these situations as they have fast closing time frames and can be closed in as few as three days. If an investor is purchasing a piece of commercial property and already has an acceptable appraisal, approved title and all closing documents are lined up, but the underwriter is being difficult with financing, bridge loans can easily help carry over monthly costs until the loan is approved.
Bridge loans are ideal for apartments, multi-family homes, hotels, small and large retail centers, senior housing, industrial properties, self-storage facilities, mixed-use properties and much more.