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Commercial Bridge Loans​

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Bridge

A bridge loan provides temporary financing while some obstacle is overcome or rectified allowing long-term financing to be put in place. These types of loans are usually terms and are excellent for purchasing turnaround properties. One of the main benefits of a bridge loan is that they can be closed very quickly as compared to long-term financing.

Benefit of Bridge Loans

  • Closes fast
  • Excellent for turnaround properties
  • Provides short term financing until loan term financing can be achieved

At hotelloans.com we have extensive resources for bridge financing with lenders that specialize in this type of financing for hotels.

Bridge Loans for Commercial Properties

If you have found the hotel or motel you have been searching for and want to make it your next business investment, we have the loans to make that a reality. Business financing comes in many different forms and while most are long-term loans, we can also help you with a unique type of shorter-term financing: a bridge loan.

A bridge loan provides temporary financing while some obstacle is overcome or rectified allowing long-term financing to be put in place. These types of loans are usually terms and are excellent for purchasing turnaround properties. One of the main benefits of a bridge loan is that they can be closed very quickly as compared to long-term financing.

Benefit of Bridge Loans

  • Closes fast
  • Excellent for turnaround properties
  • Provides short term financing until loan term financing can be achieved

At hotelloans.com we have extensive resources for bridge financing with lenders that specialize in this type of financing for hotels.

What is a Bridge Loan For Commercial Properties?

Bridge loans, also called bridge financing, swing, or gap financing, are used to finance an immediate opportunity and work generally for all commercial real estate. Commercial bridge loans are used to “bridge the gap” so to speak, between a business’s need for financing right now and a more long-term solution. Most any type of commercial real estate can qualify for a bridge loan under the right circumstances.   

Most often, bridge loans apply to commercial real estate, such as a hotel or a motel.  Bridge loans are used to finance a real estate purchase and can also be used for renovations.  In order to obtain a bridge loan for a particular property, the bridge loan lender will want to know what the permanent financing is going to look like once the property is stabilized.   

Unique Characteristics of a Bridge Loan

  • Commercial bridge loans are always short-term or interim financing. They last from a few months to a few years.
  • Bridge loans are usually fast-to-fund.
  • Bridge loans have higher interest rates than other types of loans. 
  • Collateral is used to secure these loans, usually it is the real estate you are purchasing or renovating.
  • The value of the collateral you are offering plays a significant role in whether or not you qualify for the bridge loan.
  • Most bridge loans are issued by lender that specialize in bridge financing.   

When it comes to obtaining a bridge loan for a hotel or motel, you want an expert who know all the ins and outs of financing for hospitality properties.  The experienced team at Hotelloans.com has a deep understanding of hotel lending and only work with lenders that specialize in hotel loans.

How Does Bridge Loan Financing Work?​

A bridge loan is based on your specific needs and with the lender you are working with. If and when you are presented with an urgent real estate opportunity, we are here to help with a bridge loan.

A commercial bridge loan will provide you with funding so you can take advantage of the opportunity immediately. Once you have the bridge loan, then you can look around for a more affordable, longer-term form of financing, or for a refinance.

You will be required to put up your real estate property or investment as collateral and the terms that are offered are always short-term. As a bridge loan lender, we will determine the loan amount and that amount is always based on the property you are acquiring. Properties are always evaluated in terms of the loan-to-value (LTV) or after-repair value ratio (ARV). A loan amount of up to 75% of the current value of the property is typically offered.  The borrower will be responsible for the remainder of the money needed to acquire the property.  This is called the capital injection.

If you do procure a commercial bridge loan, expect the interest rates to be higher than typical bank loans, ranging from 8% to 10%.

Other fees are often associated with bridge financing such as origination points and closing fees.  Borrowers will also be required to pay for the appraisal needed to understand the value of the property being purchased.   

What You Should Look for in a Bridge Loan

If you think bridge loan financing might be right for your needs, there are a few things to look for. There are the typical loan qualities such as terms, loan amounts, interest rates and more. With interim financing, there are two characteristics you should pay attention to.

  • Funding Time: A bridge loan needs to fund quickly. That is the nature of a bridge loan. This is why it is important to speak with financing experts like Hoteloans.com who work with hotel loans every day.
  • Prepayment Incentives: Any type of bridge loan should offer some kind of prepayment incentive. The loan is short-term, after all, and you want to pay it off early.

We have extensive lender relationships that are perfect for all of your hotel loan needs. Our years of experience mean we are in the right place to help finance you and your dreams. Contact us today to learn more about bridge loans.

Hard Money Loans for Commercial Real Estate

Being a hotel or motel owner is hard work every day. You need to keep things running smoothly. When you are in need of added cash, turn to the financial experts who specialize in finding our customers the best possible hotel loan. If you are thinking about acquiring, building, or renovating a hotel or motel property, you want a lender who understands how the hospitality business works. When you contact Hotelloans.com, we can show you the lending options for your unique situation. One of these could be a hard money loan.

What is a Hard Money Loan?

A hard money loan is a type of loan secured with commercial real estate property. Commercial hard money loans provide the borrower with the money they need to purchase a commercial property quickly, typically within just a few weeks.  They are secured by a physical asset, such as a hotel or motel.  If the borrower defaults on the loan, the lender will take ownership of the property. Since hard money loans are made on properties that are in transition, they carry higher interest rates than other types of loans.  

How a Hard Money Loan Works

Hard money loans have terms that are based mainly on the value of the property being put up as collateral. The credit worthiness of the borrower is less of a factor with hard money loans than the value of the property being offered as collateral.  A traditional bank does not offer hard money loans, but private individuals or other hard money lenders do, because they see value in this type of risky venture.

Hotel and motel investors often utilized hard money loans to capitalize on opportunities in the marketplace very quickly.  A hard money loan can close quickly but comes at a higher cost than traditional loans.  However, if the opportunity is a good one, the investor will see the value of obtaining a hard money loan to secure the property and take advantage of the opportunity.   

Pros and Cons of Hard Money Loans

First, we begin with the pros:

The borrower’s credit score is less of a factor for the lender than the value of the property.  A hard money lender will relies more on the value of the property than the credit score of the borrower.

Quick Closing Time: A traditional loan process usually takes a month or two to close, whereas hard money loans generally close in just a week or two.

Short Terms: Interest rates might be on the high side, but if you are looking to repay quickly, that will not be a deterrent.

Then there are the cons:

High Interest Rates: Rates for hard money loans are significantly higher than traditional financing.

Lower Loan-to-Value (LTV): With a hard money loan, you may be only able to borrow up to 75% of the asset’s value.

Let Our Experts Guide You to the Right Hard Money Loan

Finding the right financial options for your hotel lending needs starts by talking to us. Answer a few questions and let us know your situation. We can then match you with the loan that is right for your hotel project. Speak with one of our loan experts today.

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