Frequently Asked Questions (FAQs) for Investors
Frequently Asked Questions (FAQs) for Investors
A commercial bridge loan is a short-term loan used as interim or "gap" financing. It is often utilized by borrowers until they secure permanent financing or fulfill a financial obligation. These loans allow businesses to take advantage of time-sensitive opportunities while working toward long-term funding solutions.
Investors find commercial private lending attractive because of its higher yield, quality collateral, and lower duration risk. It offers benefits such as seniority in the capital structure, security backed by collateral, floating-rate coupons, short durations, and low correlation to other asset classes. These loans typically outperform other fixed-income investments and have demonstrated resilience across multiple credit cycles.
Borrowers seek commercial bridge loans to quickly close on a property or take advantage of short-term opportunities, such as discounted payoffs, partner buyouts, or property improvements. These loans are often used to refinance or stabilize a property before securing long-term financing. Bridge loans offer higher interest rates than traditional loans due to the speed, flexibility, and service they provide.
- Term: 6-24 months
- Interest Rate: 11-14% APR
- Lien Position: First (senior) lien
- Collateral: Commercial real estate, equipment, or a combination
- Loan-to-Value: Up to 65%, with 35% verifiable equity
- Guarantees: Business and personal guarantees
- Interest Payments: Monthly, providing consistent cash flow to investors
Like all alternative investments, commercial real estate bridge lending carries inherent risk. However, CRF mitigates these risks through stringent lending guidelines, rigorous evaluation, and diligent monitoring. Investors often find that the higher returns available in private lending are well-compensated for the associated risks when managed properly.
CRF Direct manages risk through strict lending guidelines, including a maximum loan-to-value ratio of 65%, ensuring each property has a minimum of 35% equity. Loans are kept short-term (up to 24 months), only first liens are accepted, and adequate hazard insurance is required with CRF investors listed as loss-payees. A nationally licensed third-party loan servicer handles all payments and disbursements, ensuring transparency and security.
CRF Direct uses a nationally licensed third-party loan servicer to handle borrower payments and distribute them promptly to investor bank accounts. This ensures that CRF Direct never handles investor funds, providing an additional layer of security and transparency.
This FAQ section is designed to address common investor concerns and explain how CRF manages risk in an effort to ensure secure, profitable investment opportunities. For more information reach out to one of our team members to learn more or click the link below.
