Commercial Bridge Loan: Step-by-Step Application Checklist for CRE Borrowers

1 Overview

Bridge loans plug gaps between acquisition, redevelopment or refinance and the arrival of long-term capital. Facilities sit one to three years, price on floating benchmarks and lean on the property’s future income rather than today’s stabilised cash flow. Sponsors secure time to execute a lease-up, complete a repositioning or resolve maturing debt while keeping foreclosure risk contained. The roadmap below details every milestone from first enquiry to funding so borrowers arrive at credit committee fully armed.

2 Eligibility Benchmarks

Lenders size bridge exposure against loan-to-value (LTV), debt-yield and business-plan credibility. Typical guardrails for 2025 transactions appear in the grid below.

Parameter	Typical Range	Comment
Initial LTV	60–75 % (senior); up to 85 % with mezzanine	Based on “as-is” appraisal
Debt Yield at Closing	7–9 %	Net operating income / loan
Spread above SOFR	500–700 bp senior; 900 + mezzanine	Total coupon 9–13 % all-in
Minimum DSCR on Stabilisation	1.25×	Tested in exit underwriting
Tenor	12–36 months	Often two six-month extension options

3 Document Checklist

Underwriters move quickly when the dataroom is clean. Gather these files before the initial call.

File	Detail Required
Rent Roll	Unit-level occupancy, lease expiries, concessions
Trailing-12 Financials	Income statement, operating expense schedule
Capital Budget	Line-item capex by month with contingency reserve
Third-Party Reports	Appraisal, Phase I environmental, property-condition assessment
Sponsor Track Record	Completed projects, exits, realised IRRs
Organisational Chart	Borrower SPE, GP/LP structure, management agreements
Title & Survey	Preliminary report, ALTA survey, zoning letter
Exit Strategy Memo	Permanent loan quotes or sale comps supporting take-out

4 Application Timeline

Expect four discrete phases. Day counts assume diligence reports are current and no zoning surprises surface.

1. Indicative Quote (Days 0-3): Sponsor shares executive summary and rent roll. Lender returns headline LTV, spread and fee grid.
2. Term Sheet & Deposit (Days 4-7): Borrower posts expense deposit (usually USD 25,000-50,000) to fund third-party confirms. Legal names populate drafts.
3. Underwriting & Credit Approval (Days 8-20): Appraiser completes walk-through, environmental and PCA reports land, credit pack finalised. Committee signs off with or without conditions.
4. Closing & Funding (Days 21-30): Loan agreement, mortgage/deed of trust and intercreditor documents circulate. Title updates, insurance certificates and estoppels clear. Funds wire on recordation.

5 Cost Components

Beyond the coupon, borrowers budget for three fee layers:

• Origination Fee: 1–2 % of principal, netted at funding.
• Exit Fee: 0.5–1 % of outstanding balance, payable on refinance or sale.
• Extension Fee: 0.25–0.50 % for each option exercised.

Legal, appraisal and environmental invoices run USD 65,000-120,000 on mid-size assets. Bridge lenders insist on the borrower covering these outlays up-front or via the deposit.

6 Covenant & Control Package

Bridge facilities test performance monthly. The headline triggers are:

• Budget-to-Actual: Construction draws limited to 110 % of scheduled costs per line item.
• Leasing KPIs: Minimum leasing velocity or occupancy hurdle tied to timeline.
• Interest Reserve: Six to nine months of carry held at closing, released pro rata on threshold achievements.
• Cash Management: Hard lockbox sweeps gross rents to lender-controlled account.

Falling short prompts either a cure period with capital injection or a cash-sweep escalation. Persistent breach accelerates the loan.

7 Fraud & Verification

Duplicate or altered rent rolls, phantom paying tenants and inflated square footage remain common pitfalls. Lenders counter with forensic lease audits, tenant interviews and digital floor-area scans. Title companies employ fraud detection on wire instructions to stop diversion of payoff proceeds. Borrowers avoid red flags by providing original signed leases, granting site access for laser measurement and designating dual-approval bank accounts for draw funding.

8 Arranger Value Proposition

Financely benchmarks every term sheet across a twenty-six-lender panel spanning banks, private credit platforms and debt funds. Our analysts run a shadow underwrite to stress LTV breach triggers, flag hidden extension costs and align construction draws with the actual build timeline. Engagement requires a flat mandate fee of USD 100,000-250,000, offset against a success fee of 2-3.5 % of proceeds on closing. Sponsors gain reach, pricing tension and a single point of coordination for diligence, legal and closings.

9 FAQ Snapshot

• Can interest be capitalised? Yes, most facilities offer interest-reserve buckets sized for nine to twelve months.
• Is mezzanine capital available? Private funds layer mezzanine up to 85 % combined LTV at coupons of 14-17 %.
• What exit strategies qualify? Either take-out refinancing with agencies or banks at stabilised DSCR or an outright sale backed by broker opinion of value.

Metrics and pricing reflect Q2 2025 United States commercial mortgage market conditions and may change without notice. Financely Group acts solely as arranger and provides no lending commitments in its own name. This content is for informational purposes only.