Commercial Bridge Loans – An Alternative
Commercial loan brokers know they need something to stand apart from the rest. In a highly competitive lending market, it’s especially important to carve out a niche in order to grow market share. What most brokers find is that a client has already called their bank and possibly even another lender so what can the broker offer that is seen as a unique service? There are many options, but bridge lending can easily set you apart because it is always a high-demand product and service.
In times and in markets where bridge lenders openly offer credit, traditional banks are active and other lenders like, for example, correspondent insurance companies, are searching for yield. Commercial loan brokers can carve out a niche for themselves in which they become well-known experts. If they are successful, they can receive a number of qualified referrals.
Even when brokers decide to pursue this type of lending, they still need to find a path that ensures they are supplying some sort of unique value. Becoming an expert in arranging short-term, fast-closing bridge loans is a perfect way for a loan broker to stand out from the rest of the crowd.
There is always high demand for fast closings or highly specialized loans. In markets where principals risk losing a project if delays occur, the need to close an acquisition using a short-term bridge loan increases, which makes the broker’s work in facilitating such deals that much more important and valuable.
Commercial bridge loans are generally used when permanent financing is not an option. Various factors can cause this, including low occupancy rates, poor property conditions or a lengthy closing period. Bridge loans generally last one to three years and are interest-only for the life of the loan, with a balloon payment at the end. Current interest rates for bridge loans average about 8 percent to 12 percent and these loans can close in as little as 10 days.
We have learned a great deal about different loan niches and we understand it is absolutely imperative to our success. Working well with people is just as important which is why choosing a partner you can trust is very important in the lending game. Understanding how to get complicated transactions done and being able to communicate your process to our clients and referral sources, is critical to building credibility. This helps our brand and reputation grow and it will allow us to close more loans and market more deals.