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Commercial Bridge Loans

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If you’re looking for lightning-quick funding to close a business deal, like buying a plot of commercial real estate, a commercial bridge loan might be an option to consider. A commercial or business bridge loan is a type of short-term financing to get fast funding for urgent business needs. However, a business bridge loan works a bit differently than traditional business loans, which we’ll explain below.

What is a commercial bridge loan?

Commercial bridge loans are a type of temporary short-term business funding. These loans act as a “bridge” — hence the name — to help cover a funding gap in the interim until you secure more permanent long-term financing. Because of this, bridge loans commonly need to be repaid in several months to a year, a much shorter time frame than many other types of business loans.

The types of lenders who may offer bridge loans include online or alternative lenders and hard money lenders. Bridge loans are less commonly offered by a credit union or a bank. Once you qualify, funding is usually provided in about a week.

Commercial bridge loans for real estate

A business bridge loan can be used for several short-term business expenses, but the most common is use is purchasing commercial real estate. In this scenario, you’d use a bridge loan to purchase a storefront or commercial real estate location upfront, and then refinance to a conventional commercial mortgage.

Other purposes for business bridge loans

Although buying property is the most common use of a bridge loan, business bridge loans can also be used to buy inventory or to get capital for a business acquisition. Similar to using a business bridge loan for purchasing property, you’d also want to refinance to a more affordable repayment plan.

How do business bridge loans work?

Since bridge loans are short-term funding lasting only a few months to a year, you’re expected to pay them off quickly — with possible weekly repayments. Due to these short repayment terms, interest rates can also be higher than other business loans.

Bridge loans are secured loans, which means borrowers are expected to put up collateral. Typically, the collateral used to back a business bridge loan is real estate. Lenders of commercial bridge loans will allow you to borrow up to a certain percentage of the collateral’s value known as the loan-to-value (LTV) ratio. The LTV ratio for a bridge loan is typically around 65% to 80%; by comparison, SBA loans can sometimes offer a 90% LTV, depending on the lender.

How to get a commercial bridge loan

You can get a business bridge loan in four steps:

1. Prepare to offer collateral.

Once you’ve identified a business opportunity that would require a bridge loan, prepare to put up collateral to secure the funds. Real estate is commonly the type of collateral used to back a business bridge loan.

2. Find a lender.

There are several methods to find a commercial bridge lender. Check out online lenders who offer bridge loans or search for hard money lenders in your area’s local business network. No matter what lender you choose, expect stricter qualification requirements, such as good credit history and a low debt-to-income ratio.

3. Comparison shop.

Although business bridge loans are short-term funding, it’s still worth taking time to compare offers from different lenders. Comparison shopping is a helpful step in getting business funding, because you’re able to compare lenders’ interest rates, repayment terms and even the LTV ratios. If you find a lender that offers you a higher LTV, you could borrow more cash upfront for your business.

4. Close your loan.

Since bridge loans help provide a temporary, stopgap type of funding, the closing time matters. You can expect to close relatively fast, as the average length of time to close can usually be anywhere from one week to two months.

Where to find a commercial bridge loan

Financial institutions and commercial mortgage brokers may offer bridge loans. Here are a few lenders that might offer a commercial bridge loan suited to your business needs.

Avana Capital

Avana Capital offers bridge loans with interest rates between 6.00% and 11.00%. While the website doesn’t specify the loan amounts, it does state the terms are 12 to 36 months, closing in 10 to 30 days.

Clopton Capital

Clopton Capital is a commercial mortgage broker that offers bridge loans ranging from $1,000,000 to $100,000,000 and sometimes higher. Repayment terms can be up to 60 months and can come with extensions.


Credibly, an online, small-business lender, offers commercial bridge loans up to $400,000. The website doesn’t offer any specifics on repayment terms, rates or closing times, so you’ll need to contact the lender directly for more details.

Mulligan Funding

Mulligan Funding is an online lender offering business funding. Its SBA bridge loan is specifically for short-term funding while a business awaits to secure an SBA loan. With this type of bridge loan, the lender allows for a more lenient repayment term without any penalties.

Pros and cons of a commercial bridge loan

Commercial bridge loans can help you get short-term financing while waiting for more long-term funds to be approved, but it’s best to weigh the pros and cons before deciding if it’s right for you.


  Get a lump sum of funds fast

  Short-term repayments

  Can help cover a financial gap

  May come with higher interest rates

  Not typically offered by traditional banks

  Good credit history and financial stability

Frequently asked questions

Commercial bridge loans may have prepayment penalties depending on the lender. It’s always a good idea to check with the lender you’re interested in to see whether there are prepayment penalties or any other fees associated with the loan. However, not all lenders will have prepayment penalties and some may waive them if the bridge loans are refinanced.

With higher interest rates than other business loans, commercial bridge loans can be an expensive form of borrowing. Repayment terms for business bridge loans are also much shorter than traditional business loans, which means that you need to repay the loan much faster. Both the terms and rates can be an issue if you don’t secure another type of funding in time.

Interest rates for commercial bridge loans can vary from lender to lender. However, the average interest rates you can expect to see will likely range anywhere from 4.2% to 13.2%.


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