Commercial bridge loans, when the deal can’t wait

When does a bridge loan beat waiting for permanent debt?

When the property or the situation cannot pass a permanent lender’s occupancy and coverage tests yet, and the cost of waiting exceeds the cost of short-term money: an acquisition with a closing date, a value-add plan mid-execution, a maturing note that will not be extended, or equity trapped in an asset the bank will not refinance on its current numbers. The bridge buys the time; the exit — sale or refinance — pays it back.

What LTV, term and structure should you expect?

Expect leverage quoted against two different values rather than one, a term measured in months rather than years, interest-only payments throughout, and a fee stack that appears at origination, at exit and again at every extension. Lenders underwrite the plan and the exit rather than trailing income, so the terms below are set by how credible your refinance path looks today, not by what the property earned last year.

Term — months rather than years, interest-only throughout, and usually one or two extension options written into the loan document. Ask what an extension costs, whether it is a right you have earned or a decision the lender still gets to make, and what performance test you have to pass to exercise it.

Leverage — quoted against as-is value, as-stabilized value or total project cost, and those three bases produce very different dollar amounts from the same ratio. Ask which basis the ratio is measured against, who appoints the appraiser, and what happens to proceeds if the appraisal lands short of the plan.

Index — a floating coupon that resets over a short-term benchmark rather than a fixed rate, which is why bridge cost tracks the front of the curve while the debt that retires it tracks the long end. Ask which index, which tenor, how often it resets, and whether an interest-rate cap is required.

Fees — an origination fee at closing, an exit or minimum-interest charge at payoff, and a further fee at each extension. Ask for all three as dollars on your loan amount rather than as points, and ask whether the exit fee is waived if you refinance with the same lender.

Recourse — non-recourse with standard carve-outs on institutional files, partial or full recourse where the sponsor or the asset is less seasoned. Ask to see the carve-out schedule itself, because the guaranty lives there rather than in the one-line recourse summary on the term sheet.

Exit — the refinance or the sale that retires the loan, underwritten as carefully as the purchase. Ask what evidence of the exit the lender needs before it will fund, and what it does if your plan is on schedule but the market that has to refinance you is not.

What actually varies between bridge lenders?

Speed, leverage against the plan, how draws are handled where renovation is involved, extension terms, and what they demand of the exit. Some price certainty and pay for it in pace; others price pace and pay for it in structure. The same deal quoted across both kinds is how you find out which trade your file actually supports — and that comparison is the brokerage’s job, not the borrower’s afternoon.

Property type changes what the lender tests before it will fund: RevPAR and the brand’s improvement plan on a hotel, lease-up and the agency refinance on multifamily, tenant rollover on retail and office, re-leasing on industrial. The Commercial Bridge Loan Guide for 2026, listed below, covers bridge loans in more depth.

What index are commercial bridge loan rates priced over?

Almost every commercial bridge loan carries a floating coupon that resets over a short-term benchmark — in practice SOFR or its 30-day average — with a spread on top that the lender sets file by file. That is the structural reason bridge cost and permanent cost can move in opposite directions: one is priced off the front of the curve, the other off the long end.

The index is public and dated, which makes it the one number here you can check rather than take on trust. SOFR printed 3.88% on October 2, 2026, and its 30-day average printed 3.78% on October 5, 2026, per the Federal Reserve Bank of St. Louis series SOFR and SOFR30DAYAVG. The average still sits under the overnight print because it looks backwards: the Federal Open Market Committee raised its target range by a quarter point to 3-3/4 to 4 percent on September 16, 2026, and SOFR printed 3.62% that day, before the increase took effect.

Ask which of the two your loan resets on, and how often. A daily reset moves with the overnight print; a monthly reset on a 30-day average smooths it and lags it, and which of those you want depends entirely on where you think the curve goes next. The spread stacked on top is the negotiable part, and it is the part several lenders reading the same file will disagree about.

How does getting matched actually work?

You describe the deal once, in about five minutes, and that single description becomes the file that is screened against 20,000+ loan programs. Most deals return 5–8 matches, and the median first offer arrives in under an hour. There is Zero upfront; the fee is 0.50–1.00%, paid only at closing.

YieldStack is a commercial mortgage brokerage. The rate, the leverage and the credit decision belong to the lenders competing for your deal; our job is making sure the right ones see it at the same time, so the terms you compare are real competition rather than one desk’s appetite.

What do lenders actually look at?

Every program weighs these in its own way — which is the argument for several quoting at once.

• The business plan and whether the numbers behind it hold up
• The exit — the refinance or sale that retires the loan, and how credible it is today
• Current equity and what the sponsor has at risk
• Timeline pressure, and what it is worth paying for