Commercial bridge loans often provide the lifeline borrowers need to turn investment opportunities into business realities. These short-term financing instruments are used to “bridge the gap” between a borrower’s immediate need for working capital to fund improvements or renovations, for example, and the securing of longer-term financing solutions, often through traditional lenders like banks.
It’s exactly this kind of quick access to capital that can make the difference between a project being profitable versus it never getting off the ground.
A Flexible Lending Mindset
For real estate investors and developers, capital available through Wall Street-backed lenders and traditional banks to access working capital, redeploy invested funds, purchase land, fund construction, make renovations, or complete projects is typically scarce. Ask any bank, and they’ll want vacant land developed and any property renovations completed before they’ll even consider long-term financing.
Enact Partners is not burdened by rigid, singularly focused bank-lending constraints. We are funded by Main Street investors, not Wall Street types. This allows us to fund commercial bridge loans on a case-by-case basis, conducting our own due diligence.
We look at the borrower’s “big picture,” which includes not only the asset in question, but their outside cash flow, other assets, and the possibility of attaching a second trust deed for added security. Banks, instead, look at only those assets directly related to the borrower’s loan request. The loan either meets their lending criteria . . . or it doesn’t.
We Know What It Takes to be Successful
Given our deep roots in real estate, land development, and construction, Enact Partners has a unique understanding of what it takes for borrowers and builders to be successful. We want to fund projects whenever and however possible, not impede the ability of borrowers to access capital.
Because our loan rates are closely tied to actual equity in a property (and not determined by the Fed), interest rate fluctuations don’t affect our lending as much as they do traditional banks. In fact, while many banks have stopped lending for commercial loans altogether, we find ourselves in the enviable position of being able to leverage capital on hand and borrower assets to provide short-term, commercial bridge loans for business purposes, including the recapitalization of previously invested funds, construction, and land acquisition.
How Commercial Bridge Loans Can Help
Permanent financing through a traditional bank can take months or a year or more to secure. It almost always requires renovation work on a project to be completed. By comparison, commercial bridge loans, like those provided by Enact Partners, are designed to provide borrowers with access to capital (often within days or weeks) so they can move quickly and bring their projects to completion sooner rather than later (or not at all).
Commercial bridge loans can be especially helpful to borrowers who want to make capital improvements to their already successful businesses. For example, a business might desire additional capital to make improvements to its manufacturing processes or capacity, or even increase inventory of crucial raw materials. Securing a bridge loan against real estate already owned by the company is one way a business can acquire the cash it needs to make those improvements and acquisitions in a timely and prudent fashion.
Commercial bridge loans also can help span the period between when a developer initially purchases a commercial property (such as an office building or complex), makes improvements to attract tenants, and sells it to another investor who is interested in managing the property as a long-term business venture.
Commercial bridge loans can be used to maintain project momentum while borrowers await approvals on zoning changes or conditional use permits. Traditional banks generally aren’t willing to touch such loans, while Enact Partners can work with borrowers to assess a project’s overall value and its likelihood of success, weighing those considerations when making a lending decision.
Similarly, commercial bridge loans allow owners of newly constructed, recently-renovated, or in-progress apartment buildings to fund their operations so they can demonstrate a history of high occupancy and good cash flow – two elements vital to securing mortgages originating from Freddie Mac or Fannie Mae.
Enact Partners can also extend interest-only payment terms on commercial bridge loans (while banks require interest and principal payments). This makes it easier for borrowers to meet minimum payments, which improves borrower cash flow and increases their likelihood of successfully completing a project.
Commercial bridge loans are also attractive to borrowers who want to acquire vacant, unused land to develop for housing and other business purposes. Traditional banks rarely lend capital to fund horizontal infrastructure, such as roads and utilities. They want the property to be developed before they agree to provide long-term financing. Commercial bridge loans, on the other hand, allow builders to develop infrastructure and get into the business of selling or leasing completed properties while they seek more permanent financing.
Contact Us About Your Borrowing Needs
Commercial bridge loans are not meant to be long-term solutions. They act as short-term loans, usually 12 to 36 months in length. Their role is to provide borrowers with quick access to the capital they need to fund renovations and other improvements or to purchase properties while they seek long-term financing.
If you are a real estate developer or investor, a commercial bridge loan might be just what you need to turn your business opportunity into a reality. Contact us today to explore how we can provide the flexible financing options you need to buy, refinance, or develop property for business purposes.
(760) 516-7776 | [email protected] | www.enactpartners.com