Bridge loans are quite a bit different from traditional loans in a number of ways. For example, they can be obtained much faster. Bridge loans are the ideal choice when a client needs access to fast cash because time is of the essence. That client may be working on a compressed timeline restricted to the degree that he or she cannot afford to go through traditional financing channels.
We see this a lot in the area of real estate transactions. Commercial real estate is especially challenging due to the fact that sellers do not want to spend a lot of time in a back-and-forth with buyers. They want to get their properties sold quickly, cleanly, and with as little fuss as possible.
This presents a challenge for buyers who need financing to acquire new properties. In an especially tight market, they may not have weeks or months to arrange financing. Bridge loans are the solution. The right bridge loan at the right time can mean the difference between securing a sale and losing out on a hot property.
How We Determine Credit Worthiness
The biggest time saver with a bridge loan is the actual process used to determine credit worthiness. Private lenders like Actium Partners do not require clients to jump through a bunch of time-consuming hoops. We do not pour over reams of documents to uncover every financial detail of an applicant’s life.
Bridge loans are made based on the borrower’s assets. We care less about an applicant’s past credit history and more about the assets he or she is willing to put up as collateral. As such, we can spend our time evaluating those assets rather than running a complete credit history.
What could take a commercial bank weeks to do, we can complete in as little as 24 hours. Best of all, our processes for determining credit worthiness are applied on a case-by-case basis. A commercial bank follows a predetermined formula that does not adapt to individual circumstances.
No Underwriters Here
Another big factor with bridge loans is found in who actually handles the approval process. Simply put, there are no underwriters here. Private lenders like Actium Partners tend to have very small staffs that handle all of the work from start to finish. A client’s loan application doesn’t have to go through half-a-dozen individuals who all have to give their input on approval.
In a commercial bank setting, loan applications generally go through an automated pre-approval process. From there an application will go to a loan officer who does the legwork of investigating credit worthiness. Then it goes to an underwriter for further research and approval. From there it can go to several other people before all is said and done.
You Don’t Have Time to Waste
What we have described here are basic principles of how a bridge loan approval works. It should be clear that bridge loans from private lenders do not go through nearly as complicated a process as commercial bank loan applications.
We work this way because we believe it is important to our clients. As someone in need of a bridge loan, you don’t have time to waste. You need to arrange your financing as quickly as possible so that you don’t lose out on that opportunity you’ve got your eye on. Time is of the essence, which is exactly what bridge loans are designed to address.
Actium Partners typically offers loans up to $2 million for 12 months. However, we are very flexible. If you are in need of bridge financing, give us an opportunity to review your needs.
