Commercial Bridge Loan: How to Evaluate the Pros and Cons

You are more than likely aware of your commercial short-term financing options and how they can help you achieve your long-term goals at this point. Nevertheless, if you are leaning towards a commercial bridge loan, make sure you weigh all the pros and cons before making your final decision.

The commercial bridge loans are a lot of things. For instance, these particular kind loans may be just what you need for your future endeavor, they can be the capital you were hoping for and they can help you realize your investment goals in record time. But, for all the good that comes with commercial short-term financing, there are still a few minor disadvantages and one major disadvantage to this particular kind of commercial financing.

In fact, the story always starts out the same. So often you will see a bright, business savvy person with a great investment plan get a commercial bridge loan without weighing the pros and the cons. Consequently, their great investment can easily blow up in their face because they did not truly take the time to consider one of the biggest disadvantages—larger or rather costly regular payments. Sure, this business savvy individual more than likely was aware that short-term financing is just that short-term and with all things short-term there tends to be a price. But, like most people, this bright, savvy business person simply did not realize exactly how short-term affects the repayment process.

Additionally, most commercial bridge loan lenders are simply not flexible with it comes to delayed or delinquent payments. This means before you know it you could be struggling to pay late payments, penalties, and even larger loan fees. You may even think well making sure you have permanent financing lined up will ensure that you won’t end up owning an absorbent amount of money on regular basis. Well, of course, long-term financing that is readily available will help solve this problem, but long-term financing that isn’t quite yet available means you still incur interest (high interest) on your commercial bridge loan in the meantime.

Beyond the Pitfalls

So at this point you are probably wondering—well if bridge loans have the ability to turn into a financial nightmare, why are they still so popular in the investment property industry? Well, as previously mentioned, when handled right, bridge loans can ultimately help get the job done. Moreover, most lenders allow their borrowers to choose from several repayment options. Thus, if you take the time thoroughly think through your current and future financial situation, your plans for your commercial property as well as just how you plan to pay your loan back in full then a bridge loan isn’t a nightmare waiting to happen.  

Dreams come true when you think things through

Ultimately, as previously mentioned, short-term financing may be just what you need to get your next business venture going. But, it is always in your best interest to look at a commercial bridge loan or any other kind of short-term financing from every possible angle to ensure that you are not putting yourself in a worse position than you started out in.

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701    

   

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.