Flexible Loans for the Short-Term Financing of Commercial Real Estate in Florida

A bridge loan will cover a gap between the financing you currently have and financing you expect, but haven’t received yet. Usually, long-term financing is a complex process that involves a lot of documentation and verification, plus a lengthy application process. Sometimes business plans move fast, however, and you need those funds sooner rather than later. Enter bridge loans, which provide financing options while you wait for long–term funding to be dispersed. Let’s look at how they work in commercial real estate and other important information you should know about them.

What Is a Commercial Real Estate Bridge Loan?

Bridge loans, also known as swing, gap, or bridge financing, are used to provide short-term financing for residential and commercial real estate. They allow you to move quickly on funding a commercial property without selling your current one or entering a long-term financing approval procedure. Loan companies use the value of your commercial property to determine your funding options, alongside the cash flow your business produces and your overall net worth. 

You can also use this loan to fund necessary building improvements or repairs before applying for long-term financing in the future. In these cases, you can pay off a bridge loan using the funds you receive via that long-term process in the future.

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Are Commercial Bridge Loans Safe?

As with any financing option, a borrower will want to speak with a trusted lender regarding financing and repayment options to lower the chances of experiencing any serious financial problems. With commercial bridge loans being a bit of an unknown commodity, this question is especially prudent. There’s nothing inherently risky in a commercial bridge loan that doesn’t exist in any type of financing. The paramount aspect to ensuring the safety of a commercial bridge loan is to work with a reputable, experienced lender, such as Titan Funding, who is well-versed in the commercial bridge loan space.

Fast Commercial Bridge Loans

If you’re in the market for a commercial bridge loan, you’re often waiting on approval for financing to start a project, or you’re looking to acquire a property quickly while waiting for long-term financing approval. Getting a commercial property up and running often requires a tight schedule. You’ll want to work with lenders who’ve completed many commercial bridge loans in short order without sacrificing due diligence. With quick access to financing, you can keep moving forward with your project or acquisition.

Real estate is by far one of the most common areas in which commercial bridge loans are used. Commercial bridge loans’ short-term, fast nature makes them valuable to business owners, allowing any necessary construction, repairs, and renovations to begin immediately. This keeps you from falling behind your timeline or losing potential clients based on financing delays.

Those accustomed to the slower-paced financial processes may have less experience with bridge loans and their rapid processes. Also, their quick speed might give customers’ concerns about their legitimacy. Working with a reputable lender, however, shows you there’s nothing to fear. For example, our experts at Titan Funding can take you through the bridge loan process step by step. 

You might also have questions about the costs of a fast commercial real estate bridge loan. While it’s true that they can be more expensive because of their rapid nature and their short-term utilization, it may be helpful to consider whether the benefits of getting one outweigh any disadvantages. Will the potential lost revenue supersede the short-term costs of a commercial bridge real estate loan? If your answer is yes, consider getting a commercial real estate bridge loan today.

How To Get a Commercial Real Estate Bridge Loan

Lenders that offer commercial real estate bridge loans, such as Titan Funding, will require you to use the property as collateral on this short-term funding option. The property will be evaluated as either loan-to-value (LTV) or after-repair value (ARV) with a loan typically offered for 60 to 80% of the property’s value. The borrower is required to come up with additional funding to purchase the property. Other factors to consider include:

  • Interest rates: A commercial real estate bridge loan’s interest rate might be higher than a typical mortgage.
  • Additional fees: You might need to pay additional fees on a commercial real estate bridge loan, including origination, appraisal, title, and escrow fees.
  • Credit scores: It’s often helpful to have a high credit score to ensure a successful loan process.
  • Documentation: This may include two years of tax returns, proof of income, and an action plan.

You may also have to supply financial statements for rent rolls, leases, expense and income statements for the property, and a breakdown of any renovation expenses. However, a commercial real estate bridge loan lender typically looks at the projected value of the property, thus requiring fewer financial disclosures than a typical mortgage lender.

How To Increase Your Chances of Obtaining a Commercial Real Estate Bridge Loan

If you have little or low credit, you can complete a few extra steps when applying for a commercial real estate bridge loan to ensure a successful process. You can also improve your overall credit score by paying off debts, making on-time payments, and lowering your debt-to-income ratio. Some steps you can take to increase your chances of approval include:

  • Finding a less expensive property to purchase.
  • Providing a larger down payment.
  • Agreeing to a higher interest rate.
  • Adding a cosigner or investor.
  • Pledging additional collateral against the loan.

If you apply for a commercial real estate bridge loan through Titan Funding, you can generally expect a decision within 48 hours. When approved, you may receive your financing in as little as four days, making it possible to jump on the real estate option quickly.

Explore Your Lending Options With Titan Funding

Titan Funding specializes in bridge loans as one of our many lending options. If you’d like to speak to an expert team member at Titan Funding, call us at 855-912-8313 or use our secure and convenient online contact us form, and we’ll get back to you as soon as possible. Any of our team members will be happy to answer any questions or get you set up for a consultation.

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