Bridge Loans Help a Hot Real Estate Market

The mining company Ur-Energy announced recently that it had secured a $5 million bridge loan to help it begin a new project. The concept might seem complicated to the novice, but the company will use the bridge loan to pay for the initial work on a $34 million project. Once the facility is nearing completion, the company can take out a longer-term loan and pay off the initial bridge loan.

The story serves to underline the fact that the real estate market is hot again. More and more, people and companies are using bridge loans to make quick purchases or to start work on projects with the intention of getting longer-term funding later.

Basically bridge loans are short-term loans that last anywhere from two weeks to a couple years. Interest rates may be higher than traditional lending, but documentation is low and turnaround time for Bankers South bridge loans is lightening fast.

In the Sunshine State, contractors and builders have been using Florida bridge loans for years. Once the plan is fully entitled, the developer can use a longer-term loan to pay off the bridge loan.

Businesses with multiple partners also use bridge loans when one of the equity partners wants to leave. The rest of the partners can take out a bridge loan to buy out the partner who’s leaving. Then the firm can pay off the bridge loan when a new partner buys in.

If you’re interested in learning more about bridge lending, call us here at Bankers South, where we can work together to see if it’s right for your needs.

What is a Hard Money Loan?

florida_timberland_loanA customer called Bankers South not long ago with a problem. He was coming close to a foreclosure on a tract of timberland. He wanted to sell off the tract, but not under distress in a fire sale, where he might lose his shirt.

Our loan specialists had the plan to buy him some time: a hard money loan. Instead of losing the property, he had time to put it up for sale, wait for the right buyer, and was able to walk away with a profit. He was elated, not only because he retained the equity built up in the land, but also because his credit was not ruined. We were proud that he was able to get out from underneath a bad loan – and we were happy to help him stand tall in a tough situation.

Hard money lending, or private lending, is often misunderstood. Put simply, a hard money loan is an asset-based loan. Some people wrongfully believe that hard money borrowers are in financial trouble, when actually these types of loans were the original way to borrow money. In the 19th century, it was near impossible for a lender to verify a borrower’s income, so all mortgages were asset-based loans. Over the decades, as banks competed for business, lenders slowly began evaluating borrowers’ abilities to repay the debt according to their income, instead of just looking to the value of the collateral.

Nowadays, since institutional banks look more to a borrower’s ability to repay the loan and less to the asset itself, hard money lenders have a place again in the market. Hard money lenders like Bankers South are there to help not just those in financial trouble, but any borrower who has enough equity in an asset. Hard money borrowers are often stable, successful businesspeople that just happen to find themselves with a need not met by a traditional bank loan.

Some of our borrowers are in need of a short-term loan, say a few weeks or six months, to “bridge” them over to a new project or goal. Others are behind in their current payments and need a “loan buyout” from an institutional bank. We’ll often take over their loan and restructure the payments to more manageable levels. We can help our customers sell their property too, through our real estate brokerage division, Land South Realty. These hard money loans have seen our customers through the tough times, often allowing them walking money after the sale, and everybody is happy.

Our entire team at Bankers South is knowledgeable and experienced in real estate valuation. Due to this experience, loan underwriting and property appraisal are completed in a timely fashion. Depending upon the type of loan, funding can take as little as one to three weeks. If you think a hard money loan could work for you, we’re standing by to help you through the process. Contact us at 855 898-BANK or write us an email at