Bridge Loans $0.5–5M. Collateral, Timelines, Real Costs
Bridge Loans $0.5–5M — Collateral, Timelines, Real Costs
You don’t need pitch-deck poetry. You need a loan that funds and a plan that survives credit. Below is the straight read on what closes for $0.5–5M commercial bridge asks: how proceeds are sized, what they cost, and what you must bring to the table.
What lenders test first
- LTV (as-is or as-stabilized): common caps 60%–75% depending on asset, plan, and market.
- Debt yield: many credit boxes floor at 8%–10% on in-place or underwritten NOI.
- DSCR: for bridge it’s often light, but exit DSCR must pencil at refi rates.
- Recourse: limited or partial on smaller/transitional assets; full recourse shows up when the story is thin.
Indicative Term Sheet — $0.5–5M Bridge
| Item | Range / Term | Notes |
|---|---|---|
| Loan size | USD 500,000 to USD 5,000,000 (typical) | Larger by syndication or stronger collateral |
| Collateral | First-lien mortgage on subject property | Additional security possible (rents, FF&E, guarantees) |
| LTV cap | 60%–75% of as-is or as-stabilized value | Appraisal-driven; business plan must support exit |
| Debt yield floor | 8%–10% | Based on in-place or underwritten year-one NOI |
| Interest rate | Benchmark + 4.00%–9.00% | Floating; interest-only; rate cap often required |
| Term / extensions | 6–24 months+ one or two 6–12 month options | Extensions priced + tests (no defaults, milestones hit) |
| Origination fee | 1.00%–3.00% of loan amount | Paid at closing; some lenders add an exit fee 0%–1% |
| Reserves | Interest 3–12 months; Capex/TILC as budgeted | Release on milestones; lender legal and OOC at cost |
| Recourse | Limited or partial; full recourse on tougher stories | Standard carve-outs always apply |
| Third-party reports | Appraisal, ESA Phase I, PCA/property condition, survey, zoning | Paid by borrower; some costs can be reimbursed from proceeds |
| Covenants | Reporting, budget adherence, construction/leasing milestones | Cash sweep if milestones slip or coverage falls |
Bare minimum the sponsor must bring
- Cash in: plan on 10%–20% of total cost from the sponsor group. Exceptions exist with hard collateral or cross-collateral—rare at this size.
- Liquidity after close: at least 6–12 months of carry/contingency on transitional deals.
- Net worth & track: a common rule is net worth ≈ loan amount; liquidity ≈ 10% of loan. Lenders flex for smaller tickets with clean files.
- Rate cap budget: if the note floats, cap it. It’s usually a condition precedent.
- Reports funded: appraisal/ESA/PCA/survey. No one fronts these for you.
- Exit path: refinance or sale that stands up at realistic rates and cap assumptions.
Cost stack — what to expect
| Cost | Typical band | Comments |
|---|---|---|
| Interest (IO) | Benchmark + 4.00%–9.00% | Floating; paid monthly or via reserve |
| Origination / Exit | 1.00%–3.00% / 0%–1.00% | Exit fee depends on tenor and pricing |
| Lender legal & due diligence | $15k–$75k+ | Range driven by state, complexity, counsel |
| Third-party reports | $10k–$60k | Appraisal, ESA Phase I, PCA, survey, zoning |
| Rate cap (if required) | Market-priced | Premium depends on strike and term |
Timeline — clean file vs reality
- Week 0–1: intake, data room, quick sizing against LTV/debt yield, draft terms.
- Week 1–2: term sheet execution, third-party reports ordered, legal starts.
- Week 3–5: reports land, conditions precedent cleared, insurance and rate cap set.
- Week 5–7: docs final, closing scheduled, funds released.
Add time for title defects, environmental hits, messy leases, or open permits.
Common red flags (deal killers)
- Underwriting NOI from wishful rents or ignoring rollover risk.
- No cash in and no extra collateral.
- Missing or outdated environmental and condition reports.
- Permits or code issues that will block insurance or closing.
- Exit depends on rates or cap rates that don’t match the market.
How we help
We build a lender-grade pack, size the ask to the tests, and place the bridge with credit teams that will actually sign. We coordinate appraisal, ESA/PCA, legal, insurance, and—when needed—layer mezz/pref or a rate cap so the numbers clear. Subject to underwriting, we get you from term sheet to funding without spinning your wheels.
Need a bridge that actually closes?
Send the OM, trailing financials, rent roll, capex plan, and sources/uses. We’ll size the loan to LTV and debt-yield guardrails and map a closing path.
Get a Bridge Term Sheet DraftInformational only. Any financing depends on credit approval, KYC/AML, third-party reports, insurance, and executed loan documents. Pricing and proceeds vary by asset, sponsor, and market conditions.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
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