A bridge loan is a short-term loan which
“bridges” the Borrower’s plan from one point to another. The bridge loan is
useful when a Borrower only needs financing for a short time frame where a
long-term fixed rate loan does not make sense. A hard money bridge loan can be used by a real estate developer, or other
business entity to take advantage of commercial opportunities that don't fit
into the traditional bank standards.
Our typical maximum loan-to-value allowed on subject properties is 75%.
Additionally, Borrowers are required to have a minimum of 10% cash or equity invested in a
project when applying for a bridge loan; this is known as "skin
in the game".
Mezzanine Loans (and how they differ from bridge loans)
A mezzanine loan can be a type of bridge loan in the sense that it is short-term
and not permanent financing. However a mezzanine loan is not secured by
property, it is secured by an ownership interest in the company that owns the
property. This occurs when the Borrower needs more money than he is able to
borrow against the property, so he puts up an interest in his company as
collateral.
End of Construction Pay Off Loans
If a developer has a construction project that is at least 75% completed,
they can obtain a hard money loan to pay off the construction
lender and complete the project. A hard money loan can also be used to bridge the gap
between a completed project and standard financing from a bank or traditional lender.
With an End of Construction Pay Off Loan, A developer can use the collateral of
the current project to raise capital for the next project.
Foreclosure Bailouts (Foreclosure Prevention)
A hard money loan can be used to prevent foreclosure on a commercial property.
A pending foreclosure can be stopped, if a property can be collateralized for up
to 65% of its loan to value, based on the quick sale value of the property.
Purchases (Acquisitions)
A hard money loan can be used to purchase real estate if a borrower does not
meet conventional bank standards or does not have time to wait for a traditional
banks typically slow lending process. Hardmoney allows for things that banks
never allow: low or no credit scores, incomplete
construction, property in need of repairs, etc. Hard money funding can be used
to quickly work around these financing problems and provides the opportunity for
a savvy investor to acquire new properties.
Commercial Refinances
Commercial cash out refinances allow you to
extract equity from real estate you already own. It can be a quick way of generating additional working capital to
be utilized as you see fit.. Once all required paperwork has been submitted to
our office, your hard money
loan will fund as quickly as one week.
Foreign National Commercial Mortgage Loans
This kind of hard money loan is for foreign investors who want to purchase
commercial real estate in the United States. All sorts of
property can be considered for hard money funding, including; commercial,
industrial, residential, hospitality, rehabs, etc. Few restrictions exist
for countries with notable exceptions being Borrowers from, Afghanistan,
Venezuela, Iraq, etc.
Rehab Hard Money Loans
A commercial rehabber/investor can use a hard money loan for short term financing.
Once a property
has been renovated and sold for a profit, the funds are repaid and we can often
allow the borrower to use the funds again on the next project. The average closing time for an
approved loan is just two weeks!
Do you need resources for your commercial project? On another one of our sites, we've provided some information on commercial glass door installation and acquisition. Look for more great commercial resources coming soon.
