Some people refer to bridge loans as hard money loans, in deference to their being based on physical assets such as real estate. The reason they are considered to be something of a bridge is that they often serve the role as a bridge to an upcoming transaction. Traditional loans will generally not be concluded quickly enough to work in a scenario like this, whereas bridge loans can be concluded relatively quickly because they bypass most of the constraints imposed upon traditional lenders. Here are some of the benefits provided by using bridge loans.
In contrast to traditional loans, there aren’t really any set specifications for a bridge loan. This means you can freely negotiate with an alternative lender so that an advantageous structure can be established for a bridge loan which your company makes use of.
Covering the Gap
Bridge loans typically cover the gap when you don’t have the investment funds you need to proceed with a business transaction that really appeals to you. While you’re waiting for your own real estate to be disposed of on the market, a bridge loan will give you the money you need to go ahead with your next transaction.
Buyout of Your Partner
It happens fairly often that bridge loans are used by entrepreneurs to buy out their partners, who may have developed other interests. This benefits you tremendously because you would immediately become the sole proprietor of your business, with no one else interfering with your decision-making.
One of the biggest appeals of a bridge loan is that they can be executed fairly quickly, in direct contrast to a traditional bank loan which might take weeks or months. When you’re obliged to act fast to take advantage of an opportunity in real estate, you simply can’t afford to wait for a bank loan.
Sometimes you can arrange for a much larger loan with an alternative lender because you’re putting up your own real estate as collateral for that loan. This may also help you to receive more advantageous terms for repayment, which you will be able to manage better.
Interested in a bridge loan?
A bridge loan is often the perfect solution for a commercial real estate investor, and we may be able to help with that. Contact us at Purevue Capital, so we can explore some alternatives with you for setting up a bridge loan.