Bridge Loans: How They Can Improve Your Company
One of the most difficult aspects of the commercial real estate business is timing your transactions properly. Unfortunately it’s impossible to control the market and when a good real estate deal comes along, you may not have the funds to purchase it. That’s where bridge loans come in. A bridge loan does just what its name implies; it bridges the gap between your real estate transactions, which helps you take advantage of real estate deals now without having to wait for previous sales to process. It can also bridge the gap between the initial purchase and the actual mortgage for the property.
They typically have 6 to 12-month payoff requirements, so it’s only a good idea if you’re certain you’ll be able to pay off the loan within that time. Interest rates for bridge loans vary, but properly utilizing them can help significantly increase your business’s active projects and overall income, so it’s worth the interest you’ll end up paying out.
As with any loan, there is risk involved in borrowing money before you have the means to pay it off, which is why you’ll first need to ensure your business is financially secure before applying for a bridge loan. However, once you’re in a good position and have regular clients and steady business, these loans are a great way to keep your business moving forward toward the next project while your past one is processing. Real estate transactions often take a significant amount of time, and these loans help to ensure no time is wasted in between transactions.
Bridge loans also provide the opportunity to grow your business and tackle multiple projects at once. Of course, growing your business means more money in your pocket, and these loans can help you do so quicker than you otherwise would have been able to.
An added benefit is the positive impact a bridge loan can have on your business credit score. With each on-time payment, you’re further increasing your credit score which helps lenders, stock holders, insurance companies, and customers to see that you’re an accredited business who deserves their interest.
Don’t be afraid to take advantage of all that bridge loans have to offer. You may find that your business can grow faster, run smoother, and make more money if you properly utilize these loans in your real estate transactions. Your loan officer will be able to help you learn all you need to know about these loans and how best to apply them in your business.