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
