How Do Commercial Bridge Loans Work?

How Do Commercial Bridge Loans Work?

If you require business financing, especially to purchase/fund a real estate project, chances are you’ve encountered commercial bridge loans. This short-term financing is different than the typical business loan. We’ll explain more about what commercial bridge loans are and how they work. As well as determine if this type of funding fits your needs.

What is a Commercial Bridge Loan?

As mentioned previously, a commercial bridge loan is a specific form of financing. This type of financing is typically used to finance an immediate real estate opportunity. The loan is used to “bridge the gap” between the current need for financing and a longer-term solution.

Commercial bridge loans can be confusing because the “bridge” describes how the funds are used by the borrower. It doesn’t describe any characteristics of the loan or the terms. Any business loan can be termed as a commercial bridge loan, as long as the funds are used in a certain way.

Of course, when it comes to commercial bridge loans, you’re typically talking about CRE loans. Which are used to finance the purchase or renovation of real estate while you wait on long-term financing to come through.

How Do Commercial Bridge Loans Work?

Now that we’ve defined commercial bridge loans, let’s talk about how they work.

The way these loans function may differ slightly depending on your needs and lender- but as a general rule, you may need to obtain a commercial bridge loan when you’re presented with a real and urgent estate opportunity.

This loan would give you the funding you need to take advantage of the opportunity, giving you time to find long-term financing or refinance an existing business loan. Typically, lenders that offer commercial bridge loans require you to put up the real estate as collateral, and over very short terms.

Additionally, the amount is based on the property you’re purchasing or renovating and is evaluated in terms of the loan-to-value ratio, which will typically be 70 to 80% of the value of the property. You will be responsible for the rest.


A commercial bridge loan “bridges the gap” by helping you purchase or renovate a property that must be acted on immediately. If you need help understanding commercial bridge loans, contact us at Summit Commercial Capital.