Securing a commercial bridge loan can be a lot of work and any missteps can prove costly. Below are some tips, that if followed, will increase the probability of obtaining attractive bridge financing.
Have a Defined Plan
It is imperative to have a defined plan with an accompanying budget including a spreadsheet of monthly income and expenses for the first 24 months of the loan period. A lender’s ability to both understand and quantify the strategy quickly always works to the sponsor’s advantage. In particular, ensure that you are thorough in describing why this is a value-add opportunity.
For example, if poor management is to blame, talk through why they are a poor manager (limited experience, minimal properties under management, etc.). Additionally, any insight as to why the current ownership didn’t recognize or address this shortcoming is also helpful. A well-defined strategy, along with supporting details that paint a clear picture, will give significant credibility to the deal up front.