Small Balance Commercial Bridge Loans

Small Balance Commercial Bridge Loans – Bridge the Gap and Grow Your Business in November 2022

Get to Where You Want to Be Faster With a Small Balance Commercial Bridge Loan in

You’ve got a great idea that you want to turn into a reality, and you can’t wait for your business to take off.  Small balance commercial bridge loans are a perfect option when your business needs funding but while you wait for the typical company financing package. It can bridge the gap between your short-term cash needs and what it takes for them to put together those formal documents. 

We know that taking out this loan may seem like going outside your comfort zone, but it’s really quite common among America’s small businesses today!  Click here now for more information on our business bridge loan financing!

Commercial bridge loan financing is a type of loan that can bridge the difference between your short-term cash needs and the time it takes for a company to put a formal financing package together. It may seem like you are going outside your comfort zone in taking out a  commercial bridge loan, but don’t be fooled. This type of financing is practically commonplace among America’s small businesses.

Your business assets typically secure bridge loans. You should have a good credit score to qualify for this type of loan (which is only expected if you have responsibly managed your credit). They provide temporary relief from financial constraints while waiting for more formal company financing packages to be put together. They can also pave the way towards future projects, though you should never take out this type of loan without considering other options first.

Commercial Real Estate Bridge Loan Lenders
Commercial Real Estate Bridge Loan Lenders


What Are the Benefits of a Bridge Loan?
 

The benefits of commercial bridge loans are numerous: businesses can bridge the gap between what they have and what they need. A bridge loan is used for working capital, debt or equity finance, equipment, inventory financing, capital expenditures, and more. Our commercial real estate bridge loans are a fast and flexible way to fund short-term needs and keep your business profitable.

Small Business Owners in Need of Cash Flow Solutions: Whether you’re a start-up owner or a seasoned business professional, our bridge loans offer the cash flow solutions you need to complete short-term projects and stay afloat in today’s competitive economy.

Commercial Mortgage Bridge Loans
Commercial Mortgage Bridge Loans

Are There Other Options for Small-Balance Loans?

Yes! We also offer revolving lines of credit (LOCs) that provide funds as needed up to your approved limit. 

A bridge loan is also very beneficial to a struggling business because it allows them a small amount of capital when they need it most or the ability to work with a lender who understands their short-term cash flow problems. 

Commercial Bridge Loan Rates
Commercial Bridge Loan Rates

How to Qualify for a Bridge Loan

To qualify for commercial mortgage bridge loans, you must meet these objective criteria:

  • Registered as a Borrower on our loan platform.
  • Have at least $5 million of collateral (inventory, receivables, other real estate owned or borrowed against) available to pledge as security for your commercial mortgage bridge loan.

If you have less than $5 million available collateral, you may still qualify if your business is a stable one and has positive cash flow. We will consider other factors to determine if you meet the objective criteria outlined above.

Commercial Bridge Loan Lenders
Commercial Bridge Loan Lenders

How Do Business Bridge Loans Work?

The process is straightforward: businesses apply online for a Small Balance Commercial Bridge Loan, submit supporting documentation, and then submit collateral quality report results once the program manager grants approval. The process takes anywhere from two to five business days, depending on the time of year.

Commercial properties, such as buildings, land, and equipment, can be profitable for business owners. However, when a business needs cash flow to pay bills or satisfy unexpected expenses, its owners have limited options. In some cases, the owners may choose between selling their business or borrowing money from a bank.

Commercial lenders often finance commercial properties. To secure financing, they offer a range of options: bank lines of credit, loans secured against collateral, and a commercial bridge loan fund.

Commercial Bridge Loan Fund
Commercial Bridge Loan Fund

Small Balance Commercial Bridge Loan Comparison

Small balance commercial bridge loans may be suitable for many businesses and their owners, from small sole-proprietorships through corporations with over 100 employees and many other organizations.

 

Multifamily properties may not always be affordable for a business owner, even with an approved loan. A business bridge loan may be the answer to a real estate investor’s prayers.

A business owner can accumulate raw materials and inventory needed for their business without purchasing a commercial property. They can have their own permanent, tax-deductible office space with multiple daily direct access to utilities, a phone line, and an internet connection.

For example, owners can request commercial bridge loan financing to cover the gap in their cash flow to buy one or more of the following:

  • Inventory,
  • Office Furniture,
  • Delivery Vehicles, and/or
  • Warehouse Space
Commercial Bridge Loan Financing
Commercial Bridge Loan Financing

How to Get A Bridge Loan if You Are Self Employed 

If you are self-employed and are interested in property repositioning finance, you may have had a tough time finding a company that provides the funding you need. However, this is not the case with us.  We offer bridge loans for people who need infrastructure finance. Bridge loans are perfect for small businesses and individuals who wish to invest in real estate assets or equipment without incurring the big fees that property lenders normally charge for new projects.

When looking for property repositioning finance, it is important to know how to get a bridge loan if you are self-employed. Even though our company provides bridge loan financing for any verifiable business requirement, certain conditions must be met before we can take on your application.

Commercial Bridge Loan
Commercial Bridge Loan

The Pros of Working with Commercial Bridge Loan Lenders

When working with commercial bridge loan lenders, the pros to consider are creative solutions for business owners in need of a short-term loan.

A business plan is vital to any successful business venture. A special type of loan called a bridge loan is meant for people who need capital to start their company or expand their current one. Using commercial bridge loan lenders provides creative solutions and financing tailored to your business plan if you require a bridge loan.

A commercial bridge loan lender understands the needs of small businesses and entrepreneurs. When you use the services of a commercial bridge loan lender, they help secure financing for short-term projects that allow your business to expand, improve or launch a new product quickly. These lenders understand that the money they lend will be repaid in a few months, meaning no long-term commitment is involved.

Bridge Loan Commercial Real Estate
Bridge Loan Commercial Real Estate

We Specialize in Commercial Loans So Let Our Experts Help You Unlock Your Future

Assistance with the business plan is necessary when applying for a commercial bridge loan. This process will ensure that the product or service will be successful and a part of the market by evaluating the financial strength and potential for success, including the production capacity and expected sales.

The actual process of obtaining financing from a commercial bridge loan lender is straightforward. The lender will look over your business plan and provide you with a quote based on their views of your business’s success. The quote is provided free of charge, which means you will not have to pay any upfront fees for this service.

Lenders and borrowers often have a hard time finding the right funding solution for their businesses. At times, it may feel like there are no alternatives available to help them bridge the gap between their capital needs and the short-term income they achieve from selling products or services. The entire process of acquiring capital is often complicated, especially if a business has very little working capital available. 

Convenient Access to Large Amounts of Funds by Using Payables/Receivables as Collateral

Many costs must be considered: the cost of lost sales, current expenses that must continue to roll over into the next month to keep up with what is owed to suppliers and employees during that time, and other such expenses will be made much more difficult if a business finds itself unable to meet payroll when it is due.

Additional revenue is needed to make the minimum payment requirements. After expenses are paid, the business owner is often left with a large income gap to meet their obligations. This can cause the company to default on its debt, resulting in increased suffering for those affected by this problem.

Bridge loans are a rescue option for businesses that have been left with an unmet need for capital and have a strong working capital cushion to cover current expenses and operating expenses for some time. Having a bridge loan enables the business owner to obtain additional funding while waiting for their income to cover the remaining costs.

Annual revenue is one of the main factors a lender considers when determining if a business owner might benefit from a bridge loan. While this is not the only factor, it is an important one that helps determine how much funding can be obtained. Businesses with higher annual revenues are more likely to obtain larger loan amounts.

Businesses with more working capital on hand may obtain larger loans than those with less working capital available. A business owner can access large bridge loans by using payables and receivables as collateral, which requires a thorough understanding of how these terms work.

Bridge Lenders Commercial Real Estate
Bridge Lenders Commercial Real Estate

How to Obtain a Great Commercial Bridge Loan Rate

Attractive short-term solutions such as commercial bridge loans are found because many lenders are willing to work with borrowers at a desirable rate. As a borrower, you will want to focus on getting the best rate possible when searching for the most appropriate solution that will meet your short-term funding needs.

Though many lenders will offer high rates for a business loan, not all of them will provide consistent savings over other available options. One of the main reasons it is important to focus on securing a good rate is that interest rates tend to fluctuate over time for many reasons. Even if you received a low interest rate in one year, it might change in another year if the market changes, affecting rates across the board.

What Is the Difference Between Unsecured and Secured Lending Securities (Collateral)?

Unsecured lending securities, also known as collateralized loan obligations, are tradable debt backed by a pool of financing collateral consisting of underlying loans and accounts receivable. This crediting is typically provided by a regulated financial institution or another reputable third party. The security may exist as a separate account with the issuer or s included in the credit facility that backs the lending securities. Unsecured lending securities are sometimes referred to as CLOs, though this is not technically accurate since they also include collateralized debt obligations (CDOs) and other types of asset-backed securities.

Secured lending securities are also called collateralized loan obligations (CLOs). These are effectively a form of security backed by the cash flow from loans made to borrowers who have agreed to purchase additional notes from the issuer regularly. 

Secured lending securities are those that have more stringent requirements for the borrower or investor of the securities. Some secured lending securities can provide the same benefits as unsecured ones; however, secured ones must meet a higher standard for risk before being sold to someone else.

Ways New Builders Can Finance Their Projects with Construction Financing

Vertical construction projects are hard to finance because banks are wary of the risks. The good news is that new builders, through creative financing techniques, can find ways to finance their projects.

Vertical construction projects are hard to finance because banks are wary of the risks. The good news is that new builders, through creative financing techniques, can find ways to finance their projects. 

Real estate projects such as apartment buildings, hotels, and shopping centers are difficult to obtain because of the lengthy construction period.  But there are ways to finance vertical construction projects.

Bridge Loans Offer a Low-Interest, Short-Term Alternative to Bank Financing

In addition, even though they may not have sufficient cash flow yet, new builders can finance projects during the development phase by obtaining a bridge loan from a commercial bank or going to an investment banking firm specializing in bridge loans.

Mixed-use projects, such as a hotel and condominiums, are also subject to high financing risks because these projects have short construction windows. But there are ways to finance
 these projects too. 

Bridge loans are financial instruments that bridge the gap in financing between construction and business operations. Bridge loans are secured by collateral such as properties sold if the project were to fail. Banks usually prefer their regular loans over bridge loans because of the additional risk involved and could decide not to provide additional funds. 

Bridge loans thus become an untapped source of financing for new builders who can use bridge loan proceeds to develop their business ventures. At the same time, they wait for capital from traditional sources such as banks or investment banking firms.

Bridge the Gap Between Construction Financing and Traditional Capital Sources 

Retail spaces are also affected by the construction and business cycle gap. For example, retail spaces that open during the recession period, in which sales are low, could lead to a higher operational risk than those open during the boom periods.  Bridge loans can help close this gap in financing retail properties.

New builders who have found ways to finance their projects through bridge loans can now operate under more secure financial circumstances. At the same time, they await funds for their projects through traditional sources such as banks or investment banking firms.

Alternatives to Typical Bank Financing Arrangements

When a bank issues a loan or mortgage to a qualified borrower to construct a building in addition to an existing structure, it often includes “builder’s risk” coverage as part of the package.  Bridge to construction takes the form of a purchase money mortgage, construction loan, or double-ended loan.

Purchase Money Mortgage

A purchase money mortgage is usually structured so that the bank will not require repayment until the structure has been completed and sold. The borrower will pay interest on the loan from the date it was originated until the completion date. When the project is complete, any amount not yet paid off will be due and interest on any remaining balance at an adjusted rate of interest. 

Additional Alternative Solutions

But, there are alternatives to traditional bank loans for commercial projects. For instance, a construction loan can be structured to provide the financing needed to build a development that consists largely of commercial properties. A lot of lenders now offer “commercial construction loans” in this form. (Some may even refer to these loans as “condo loans.”)

Some lenders offer commercial construction loans with fewer conditions than traditional bank lending arrangements. Lenders may also have lower interest rates for “commercial construction loan” products and may require less collateral for the loan on multiple-family residential properties.

In some cases, the borrower may be able to finance a project by selling its inventory and paying off a construction loan with proceeds from an existing line of credit.

The Sooner You Apply, the Sooner You Will Be Approved for a Loan

Rigorous underwriting requirements are used to make sure each loan is a credit-worthy candidate. Loans underwritten by us are consistently approved with a high 97%-98% approval rating, on average.

The underwriting criteria that provides the loan approval rate are:

  • First Mortgage Loan – A first mortgage is simply a mortgage on your business that usually becomes due first.
  • Borrower to Borrower Loan – Borrower to borrower loans allows you to leverage your capital for a low-interest rate. Our borrower-to-borrower loans typically carry a six-month term and have no prepayment penalty. 
  • Equipment Loans – Equipment loans allow you to pay off outstanding debt or pay for new assets by borrowing against the equipment, tools, machinery, and vehicles used in your business. Equipment lending is a more flexible type of borrowing that is financed over shorter terms.

With low, fixed spreads and no upfront fees, our funding continues to be competitive. In fact, the average industry loan also has an excellent 5-year default rate of 1.12%, compared to the industry average of 3.52%.

Our streamlined underwriting process means most loans can be funded quickly with minimal information and paperwork.

Conclusion

Small balance commercial bridge loans are a large source of funding for financing vertical construction projects. New builders who have found ways to finance their projects through bridge loans can now operate under more secure financial circumstances. At the same time, they can also await funds for their projects through traditional and alternative sources.

To get your project started, reach out to us today! Our team is always willing to assist you with any questions or concerns you may have.

Call us at (888) 653-0124 for more information or apply online with our 1-minute application. If you are seeking a no-hassle loan, we can help. It’s that simple!

Have Additional Questions?

call now 888-653-0124
call now 888-653-0124
Apply Now!

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