<h2 class = 'uawtitle'>Learn What Is A Commercial Bridge Loan And The Purpose It Serves</h2><br />
<div style='font-style:italic;' class='uawbyline'>by Tom G. Honeycutt</div><br /><br />
<div class='uawarticle'>It sometimes happens that an investor wants to purchase a piece of real estate with a closing date before financing arrangements can be arranged. Fortunately there is a temporary solution to this dilemma; bridge financing. Find out what is a commercial bridge loan and the advantages it has to offer those who don't want to miss out on opportunities to purchase certain properties.<br />
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This short-term lending arrangement is usually taken out for anywhere from two weeks to at most three years and acts as a monetary "bridge" until the finalization of the long-term financing, which will ultimately be used to pay back this initial amount borrowed once obtained. They typically have higher interest rates, shorter amortization periods, and lower loan-to-value ratio, but they can usually be arranged in a timely manner with minimal documentation needed.<br />
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The most common purpose for these loans is to enable timely investments that would otherwise not be possible due to timing or circumstances that are not in favor of obtaining traditional financing. The higher risk status of these clients is the main reason why the interest rate is higher.<br />
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The major financial institutions do not typically provide lending services for these high risk investors with limited documentation, and as a rule one will not find these short-term loans at a bank. Sources are mainly from private companies, investment pools, or individuals.<br />
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The maximum loan-to-value ratio for commercial properties is 65 percent, based on it appraisal value. The loans may be either closed, which only guarantees its availability for a specific time period, or open, without a fixed date by which it must be paid off, at least not for some time. Subsequent bridge financing may be available for a lower interest rate as the risk is less.<br />
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One scenario in which this form of lending is particularly useful is when the investor needs to wait for a permit to be approved. Once the permit is granted, the lender will be paid back from the long-term borrowing plan of the investor. Someone who wishes to secure equity on a property they currently own to purchase another can also benefit from bridging, and then pay it off with the sale of the property.<br />
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Businesses that are in the process of changing management on some level may also find it useful to obtain bridge financing to stay afloat while in search of new investors. It can also be used for the quick purchase of a discounted investment or auctioned-off property without all the red tape associated with traditional means.<br />
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About the Author:<br />
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<div class='uawlinks'>Tom G. Honeycutt is a full-time real estate entrepreneur in Atlanta, GA. Tom helps readers by providing practical and useful knowledge to better understand lending choices. If you are looking <a href="http://www.ifundinternational.com/ifund-commercial-investment-loan-lenders-application-form-atlanta-ga/">Commercial Investment Loan Lenders Application Form | Atlanta, GA</a> He suggests you check out the website<a href="http://www.ifundinternational.com/" > iFund International</a>.</div><br />
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