Business bridge loans

What is a business bridge loan?

A bridge loan buys time. You borrow against an asset you own or are buying, pay interest only, and repay the whole balance when the planned exit happens. Common uses: closing on a building before your SBA loan funds, buying a property that needs work before a bank will lend on it, covering operations while a large receivable or equity round lands, or paying off a maturing loan while you refinance.

Private lenders, debt funds and some banks offer them. Because the term is short and the loan is secured, underwriting focuses on the collateral and the exit rather than on tax returns. In real estate it overlaps with hard money; for operating businesses it overlaps with asset based lending.

Who qualifies for a bridge loan?

You need collateral the lender can value and sell, usually real estate at 60% to 75% loan to value, and an exit the lender believes: a signed purchase contract, a commitment letter from the permanent lender, or a term sheet from investors. Owner credit of 620 to 650 is usually enough, and cash flow matters less than the ability to carry interest payments until the exit.

• Declined most often: no clear exit, collateral in a thin market, loan to value above 75%, and borrowers whose only plan to repay is another bridge loan.
• Businesses without hard assets rarely qualify; see financing with no collateral for the alternatives.

What does a bridge loan really cost?

A typical example: you borrow $500,000 for 12 months at 12% interest only with 2 points. Interest is $5,000 a month, $60,000 for the year. The points are $10,000 at closing, and a 1% exit fee adds $5,000 when you repay. Total cost is $75,000, or 15% of the loan for one year of use. Repay in six months and the interest halves but the fees do not, so the effective rate rises.

Add legal fees, an appraisal and a title policy, often $5,000 to $15,000 on a real estate bridge. The real cost to watch is the extension fee if the exit slips: typically another 1 to 2 points for each three to six month extension. Read how to read a term sheet before you sign.

How do you qualify, and what documents do you need?

Documents center on the collateral and the exit: the purchase contract or deed, a recent appraisal or broker opinion of value, proof of insurance, the exit evidence such as a lender commitment letter or sale contract, your formation documents, a personal financial statement and two years of tax returns. Operating business bridges add bank statements and a receivable aging.

Our document checklist covers the standard items. The exit evidence is what gets you approved. A bridge lender will fund a borrower with weak returns and a signed sale contract long before one with strong returns and a vague plan to refinance someday.

How long does a bridge loan take?

Typically one to three weeks from application to funding, and a few days for repeat borrowers with a lender that already knows the collateral. The appraisal or valuation and title work set the pace on real estate; a lender willing to use a desktop valuation can close inside a week.

That speed is the whole product. If you have 30 days or more, a conventional loan or line of credit will almost always be cheaper. See how long business loans take for the comparison.

When should you choose something else?

Choose a commercial real estate loan if the property qualifies for permanent financing now and you can wait 30 to 60 days, because a 7% 25 year loan beats a 12% one year loan by a wide margin. Choose a line of credit for an operating cash gap, since it is cheaper, revolving and not tied to a single asset.

Do not use a bridge loan without a dated exit. Interest only payments feel light until month twelve, when the full balance is due, and a bridge that cannot be refinanced ends in a forced sale of the collateral.

How do you apply for a bridge loan?

Apply once on this site with your collateral details and exit evidence, and your application reaches bridge and private lenders active in your asset type and region, alongside banks in case a permanent loan is possible in your timeframe. It is free for your business, and we are paid the same whichever lender you choose. You can also ask your AI assistant to apply through our MCP server; it reads your documents, fills the application and submits it.