A commercial bridge loan is short-term financing secured by a retail, office or industrial property, used when a conventional lender cannot move on your timeline or the building does not yet fit a bank's box. It is underwritten mainly on the equity in the property, your capacity to make the payments, and a credible plan to repay or refinance.
That is the whole idea. The details matter, though, because retail, office and industrial buildings each create different questions for a lender. Here is how we think about them.
Why commercial buildings need a different kind of loan
Banks lend most comfortably on stabilized buildings: signed leases, steady occupancy, seasoned ownership and clean financials. Many of the opportunities investors actually chase look different. The anchor tenant just left. The building is half vacant after a lease expiration. The seller wants a fast close. The property needs work before a bank will look at it.
A commercial hard money or bridge loan exists for those moments. It is not a replacement for permanent financing. It carries the property from the situation you are in to the situation a long-term lender wants to see.
How we look at each property type
Retail
For retail, the questions are about the tenants and the location: how many tenants, how long their leases run, whether the center depends on one anchor, and what happens if a space goes dark. A fully leased strip center and a half-empty one with a repositioning plan are very different files, and both can be financeable if the equity and the plan are sound.
Office
Office underwriting leans heavily on the exit. Because lease rollover and vacancy can move quickly, we want to understand how the building will reach a stage where a long-term lender is comfortable. A plan to lease up, renovate common areas or convert to a better use needs to be specific, not aspirational.
Industrial
Industrial buildings are often simpler to read: clear height, loading, use, and tenant profile. Owners buying a vacant or partly leased building to lease up, or an owner-user acquiring a facility, can usually explain the plan in a few sentences. We still look at the same three things: equity, capacity and exit.
Equity first, then capacity, then exit
Our underwriting is equity-led rather than credit-score-led. We look at the value of the property and how much of it is secured by your own capital, at whether the property income or your other resources can support the payments, and at how the loan gets repaid. Every application is reviewed individually, so a complicated file is not automatically a declined one. For more on this, see what private lenders look at when underwriting.
Key takeaways
- A commercial bridge loan carries a retail, office or industrial property to the point where permanent financing is available.
- Underwriting centers on property equity, your capacity to make payments, and a specific exit.
- Vacancy, tenant turnover and unfinished work are reasons to use a bridge loan, not automatic reasons to be declined.
- Property type changes the questions we ask, not the basic structure.
Common ways borrowers use these loans
- Acquisition. You need to close quickly on a building that a bank cannot fund in time.
- Repositioning. You are renovating, re-tenanting or changing the use of the building and need funding while income is still low.
- Tenant gaps. A major tenant has left or a lease is rolling, and the property does not currently meet a bank's occupancy requirements.
- Refinancing out of a problem. A maturing loan is coming due and the borrower needs time to stabilize the property before the next permanent loan.
Planning the exit before you borrow
The exit is the part borrowers most often leave vague. Before you take any bridge loan, be able to answer plainly: what has to be true for a bank to refinance this building, and how long will that realistically take? Leases signed, renovations completed and occupancy reached are the usual milestones. Build in a cushion, because lease-up and permitting rarely run exactly to plan. Our article on exit strategies for a bridge loan goes deeper.
What to have ready
A tidy package speeds everything. Expect to provide the property address and type, purchase contract if any, current rent roll and leases, an operating history, your renovation or leasing plan, and a description of how you intend to repay. Our documents page lists what is typically requested.
On timing, we can offer approval in as little as 24 hours and funding in as little as seven days, subject to a complete file, underwriting, title review and property valuation. Approval is not guaranteed, and every deal is reviewed on its own facts.
Have a retail, office or industrial property you are trying to finance? Call us at (800) 943-1314 or start your application online. General information only; this article is not legal, tax or investment advice.
Published by the US Lending & Company underwriting desk. General information only — not legal, tax or investment advice.