Steps to obtaining bridge capital for your real estate ventures

Written By Steps To Faculty Published July 15th, 2010

Bridge capital can be a good alterantive if you are trying to rapidly close on a commercial real estate deal or save property from foreclosure and need a short-term solution to qualify for a regular long-run financing opportunity with your usual lenders. Bridge capital, or commonly known as a bridge loan, is simply a short-term loan granted to help you close a real estate deal when you are unable to get regular long-term financing. The loan can help you improve your credit score and also let you make the needed improvement to the real estate to make a sale or obtain further funding. Bridge loans are repaid when either the real estate is sold, the property improvements have been completed, or funding from traditional sources has been secured. How do you get such short-term funding? Let’s take a look.

Step 1 Research the terms

Before running out and applying to every bridge loan lender, review the facts about the loan. Bridge capital is a non-standard loan used to bridge a short-run circumstance that is unique in nature. Most banks consider this very risky and as such do not provide bridge capital to property owners easily given the lack of proper documentation. As such, bridge capital can be found through special investment pools and wealthy individuals. Interest rates for bridge capital typically run between 12% and 18% for a 3 year term and up to 4 points are charged. Bridge capitl loans are set for a fixed period of time if there is no predetermined repayment date. But generally the loan must be repaid within three years.

Step 2 Consider your options

Given the basics of bridge capital, determine if you can reapy such a loan and if your property will generate sufficient revenue to warrant seeking bridge loans.

Step 3 Find lenders

If you are in desperate need of bridge capital, you can search through investment pools for firms that lend such loans. Some good companies to try are ArctusCapital.com, www.porterbridgeloan.com/092603.php, and karpscapital.com

Step 4 Explain your situation

Once you have decided on a bridge loan lender, communicate your unusual situation to them and listen to what they can offer you. Generally, they will send a representative to visit the property and review the terms with you.

Step 5 Prepare for a Due Diligence report

Prior to securing brisge capital loans, a due diligence process must occur regarding your finances. During this two to three week period, get your books in order and be honest with the lenders about the value of the property.

Remember, traditional sources of funding are not the only solution to help you in real estate. Please visit stepsto.com for more great business advice.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.