Bridge Loan
A bridge loan is short-term commercial financing — typically 1–3 years, interest-only, floating rate — used while a property is repositioned, leased up, or awaiting permanent financing. Bridge lenders underwrite the business plan and as-stabilized value rather than current income, accepting DSCRs as low as 1.10x or below.
Bridge debt costs more than permanent debt — typically several hundred basis points over comparable fixed-rate loans, plus origination and exit fees — because the lender bears transition risk.
Common uses: acquiring a half-empty building to lease up, funding renovations before a refinance, or closing quickly when permanent financing can't meet a deadline. The exit (sale or refinance) is the core of bridge underwriting.