A
bridge loan is an immediate, short-term loan, one to
sixty months, usually made in anticipation of intermediate
or long-term financing. Pay back the bridge when permanent
financing is in place with no prepayment penalties .
Bridge
loans "bridges" two different types of cash
gaps. The first "bridge" is a loan that institutional
banks refuse to approve. The second "bridge"
is for the individual investor or company who is between
deals and requires immediate, short-term funding until
a traditional loan is issued.
BRIDGE
LOAN LENDERS
Bridge lenders only use private capital. "Loan
Committees" are comprised of one or more principals.
This creates an efficient and expeditious decision-making
atmosphere that enable lenders to quickly perform their
due diligence and fund loans as quickly as in seven
business days.
EXAMPLE
An owner of a $2,600,000 office building in excellent
condition, with a good positive cash flow, needs $800,000
to pay the IRS within 15 days. He is willing to sell
this property for $800,000 down to pay off the IRS.
The prospective buyer is property rich but cash poor,
and cannot raise this amount of cash within this time
period through conventional means. To take advantage
of this very narrow window of investment opportunity,
the buyer obtains the $800,000 bridge loan within 10
days to quickly secure property title. The buyer then
paid back the $850,000 within 30 days with no prepayment
penalties when loans from conventional sources came
through.
BRIDGE
LOAN GUIDELINES
Loan Amounts: $250,000 to $35,000,000 in all 50 states
and some foreign countries. Credit Ratings: Will consider
any credit rating: A+ to D, including bankruptcy. Amount
of Loan: Up to 65% of property value. Minimum Down Payment:
As little as 5% or 10% if seller carries a second mortgage.
Terms: 400 plus basis points over corresponding U.S.
Treasury index. This is subject to credit rating, location,
type and condition of property. Loan Quote: 2 business
days or less. Speed of Loan: Loans are issued as quickly
as 7 days
