If you’re already a business property owner looking to expand and a traditional loan doesn’t make sense for your needs, you may want to consider a bridge loan. Bridge loans are great for business owners who are in the process of growing their business or working on a short term project and need some extra capital. Though the time frame does vary, they’re usually termed for around 6 months. Here is everything you may need to know about a bridge loan for your business.

When Would I Want to Take out a Commercial Bridge Loan?

Bridge loans exist to assist people with commercial properties like hotels, medical buildings, retail centers and multi unit apartment buildings. You may want to consider a bridge loan if you’re in the process of buying a new piece of real estate and haven’t sold your existing property yet; you can use your bridge loan while you’re waiting to finalize the sale of your old property. You can also use one if you’re in the middle of a construction project and need extra capital to complete it on time.

How do I Qualify for a Bridge Loan?

Just like a traditional commercial real estate loan, the bank will come and examine the details of your property, along with your finances. Your property will be appraised to determine its value, which will determine the loan amount you’re approved for. While maintaining a good credit score is always important, they don’t completely determine your eligibility. Borrowers are often approved for bridge loans because of the value of the property, which has income earning potential. If, upon evaluation it’s determined that it makes good business sense to extend you the loan, you’ll move on to the loan process, which is often much quicker than securing a traditional loan.

Make sure you thoroughly review all the terms and conditions of the loan so you know how much interest you’re paying and how long of a term you have on your loan.

What Happens Once I’m Approved?

Once you’re approved for your loan, you’ll receive a large balloon check to fund your project. Make sure you work with your lender to set up payments so you don’t default on your loan.

Bridge loans can be helpful when you’re working on a major project. As long as you pay it back in a timely manner, the benefits of a bridge loan for your business may be immediate. When you expand, you’ll likely see an increase in revenue which of course means more profit for your bottom line.