Borrower Pledges Real Estate to Secure Bridge Loan

It’s often said that if a business isn’t growing, it’s dying. But sometimes growth is constrained by an inability to secure funding from a traditional bank. This is where bridge loans from private lenders can mean the difference between failure and success.

Here is sample situation where private lending offers an ideal solution.

A borrower with a broad range of business interests seeks capital for expansion. While the borrower’s ideas and ventures are sound, traditional banks simply won’t provide the needed investment to support these growth initiatives. However, the borrower owns large parcels of land that are zoned for commercial development and the business owner is willing to pledge the land, plus buildings within the parcel, as collateral for a loan.

The borrower may approach a private lender to fund a short-term bridge loan (also known as a hard money loan). Where banks may balk at a seemingly complicated deal or require a long approval process and reams of documentation, a private lender will commonly undertake due diligence to assess the zoning issues relating to the land and, in many cases, is able to extend a loan to the borrower using a percentage of the appraised value of the land as collateral. This type of hard money or bridge loan will provide the borrower with the needed cash for expansion and give the private lender a significant margin of safety in its investment – clear wins for both parties.

Learn about the many ways Actium bridge loans and private lending can help you expand your business.