What Is a Commercial Bridge Loan and When Should You Use One?
January 15, 2026 • Travis Penny
A commercial bridge loan is short-term real estate debt — usually 6 to 36 months — that gets a sponsor from where the deal is today to where it needs to be tomorrow. Bridge debt fills the gap between an immediate capital need (acquisition, recapitalization, stabilization) and a permanent takeout (agency, HUD, CMBS, life company, or sale).
When a Bridge Loan Is the Right Tool
Most institutional bridge debt falls into one of five buckets: speed-driven acquisitions, value-add stabilization, hospitality PIP completion, special situations (partner buyouts, DPOs), and bridge-to-permanent strategies (bridge to HUD, bridge to agency, bridge to CMBS). If your deal looks like one of those, bridge is on the table.
How Commercial Bridge Loans Work
Most bridge loans price off SOFR plus a spread, run interest-only, and carry 6 to 36 month initial terms with extension options. Leverage caps depend on asset class, sponsor, and the takeout. Stabilized bridge prices tighter than transitional. Hospitality, construction completion, and lease-up bridges price wider.
Plan the Takeout Before You Sign the Term Sheet
The single biggest mistake sponsors make on bridge debt is signing the bridge without a real plan for the permanent takeout. Bridge that doesn't refinance becomes a forced sale. Before you close, the takeout should be modeled with current rates, current LTV/DSCR assumptions, and a real lender on the other side.
What $5M+ Sponsors Actually Pay
Pricing on a $5M to $500M+ bridge loan today depends on asset class, sponsor strength, and the strength of the takeout. Send the actual deal — property type, basis, current and projected NOI, sponsor net worth and liquidity, and the planned exit — and you get a real number, not a brochure.
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