Glossary · product

Commercial bridge loan

Also called CRE bridge loan, commercial bridge financing.

Short-term financing secured on commercial property or business assets, used to acquire or reposition an asset until permanent financing or a sale repays it.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

This is the property-secured version of a bridge. It funds acquisitions that must close quickly, properties that cannot yet support permanent debt because occupancy or income is too low, repositioning and renovation, and partner buyouts. Repayment comes from a refinance into permanent debt or from a sale.

Sizing runs off the asset rather than the operating business: loan to value on the current or as-is value, loan to cost including the renovation budget, and a projected debt service coverage ratio at stabilization that the take-out lender will require. Renovation money is usually held back and released in draws against completed work.

Structure is typically interest-only for the term, with an origination fee, sometimes an exit fee, and extension options priced in additional points. Some deals include an interest reserve funded at closing, which means the loan pays its own interest for a period out of proceeds you borrowed.

Guarantees are usually limited but not absent. Non-recourse structures commonly carry bad-boy carve-outs converting the loan to full recourse on defined conduct such as fraud, waste, unauthorized transfers or a voluntary bankruptcy filing.

Where this one catches people

The stabilized projections that justify the bridge are also the refinance test, and they are usually the sponsor's. If the property leases up slower or rents come in lower, the take-out lender's coverage test fails at exactly the moment the bridge matures. The exit assumption is the loan's real underwriting, and the borrower carries it.

Worked through

Purchase 2,000,000, renovation 500,000, bridge at 70 percent of the 2,900,000 stabilized value gives 2,030,000, funded as 1,600,000 at closing and 430,000 in renovation draws. At 11 percent interest-only, monthly interest on the full balance would be about 18,600, so the interest reserve consumes proceeds while the asset is empty.

Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.

Where you will meet this term

Working Capital Term Loan Asset-Based Lending

Read next

Achievement of milestonesFunding released in stages as defined work is completed and verified, rather than in one lump at closing. Balloon paymentA large final payment due at maturity because the scheduled payments were calculated on a longer amortization… Bridge loanShort-term financing taken to cover the gap until a defined event, usually a sale, a refinance or a permanent… Debt service coverage ratio (DSCR)Cash available for debt payments divided by the payments due in the same period; above 1.0 means the cash cov… Loan-to-value (LTV)The loan amount as a percentage of the collateral's appraised value — the lender's measure of how much cushio… Personal guarantee (PG)An individual's separate promise to pay the business's obligation out of personal assets, enforceable even af…

Commercial bridge loan — common questions

What does commercial bridge loan mean?

Short-term financing secured on commercial property or business assets, used to acquire or reposition an asset until permanent financing or a sale repays it.

Where does commercial bridge loan catch people out?

The stabilized projections that justify the bridge are also the refinance test, and they are usually the sponsor's. If the property leases up slower or rents come in lower, the take-out lender's coverage test fails at exactly the moment the bridge matures. The exit assumption is the loan's real underwriting, and the borrower carries it.

Is commercial bridge loan the same as an interest rate?

Commercial bridge loan is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does commercial bridge loan apply to?

Working Capital, Term Loan, Asset-Based Lending.

Is there a worked example of commercial bridge loan?

Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.

What else should I read alongside commercial bridge loan?

Achievement of milestones, Balloon payment, Bridge loan, Debt service coverage ratio, Loan-to-value.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.