A Bridge Loan is a financial product that functions as a short-term amortizing loan to support projects or investments that are expected to generate returns. Small businesses, particularly in their early phases, frequently see the chance for extreme growth, but often on the other side of a financial hurdle. Business owners and entrepreneurs experience immense pressure at the outset of their business venture to cover operating costs merely to keep the doors open. Restaurants, hotels, and retail operations often want to be up and running before conventional financing has been approved in order to start bringing in money. A Bridge Loan covers businesses during the waiting period. It allows owners to avoid further dividing up their interest in the business with a new partner and losing out on profits and control over critical business decisions in the long run. This is a perfect model before taking over the conventional, SBA loan or business expansion and requires at least one year of high-volume sales. This could be 6 to 24 months with a line of credit or one time fund. It takes 7-10 days to approve and fund.

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When is Hard Money or Bridge Loan Appropriate?

You can secure a hard money or bridge loan for almost any property type, including:

  • Residential investment properties
  • Multi-family properties
  • Commercial real estate
  • Industrial real estate

Hard money loans can be used when the loan is needed within a short time or when banks are simply not an option. If you have a good credit, a stable income history, have the time for the lengthy approval process, and you haven’t been involved in a foreclosure or short sale, conventional borrowing may be a better option for you. Hard money loans are ideal for situations such as:

  • Fix and flips or rehabbing a home
  • Land and construction loans
  • If credit issues are present
  • Quick money for property purchase
  • Emergency business capital

Why Use a Hard Money or Bridge Loan?

One reason to use a hard money loan is quick funding. The timeframe is typically ten days or faster, compared to the month or 45 days it can take for approval of a conventional loan. The application process only takes a day or two, again, a much shorter time than that of a conventional loan
Faster funding is a significant advantage for a real estate investor who wants to purchase a property with multiple competing bids. A hard money loan can provide a fast closure, setting the offer apart from others using conventional financing.

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