Choosing the right financing strategy is critical to the success of any real estate investment. Among the most common options are bridge loans and permanent loans, each designed for a distinct phase in a property’s lifecycle. Understanding their differences, and when to use each, can help you align capital with your business plan more effectively.
What Are Bridge Loans?
Bridge loans are short-term, interest-only loans used to “bridge” a gap between acquisition or refinancing and stabilization or permanent takeout. They typically have terms ranging from 12 to 36 months and are ideal for transitional assets, including those needing renovations, lease-up, or repositioning. While rates are higher than traditional loans, they offer speed, flexibility, and minimal prepayment penalties.
When to Use a Bridge Loan
Bridge financing is best suited for:
Properties that don’t currently qualify for permanent financing due to low occupancy or weak cash flow
Sponsors planning a value-add renovation, capital improvement, or tenant repositioning
Situations where time is of the essence, such as auction purchases or expiring seller financing
Borrowers needing flexible terms, including interest-only payments or quick close
What Is Permanent Financing?
Permanent loans are long-term, stabilized financing products—often with terms of 5 to 30 years. They are typically used once a property is fully leased and producing predictable income. These loans offer lower interest rates and amortization, making them ideal for holding and cash-flowing assets. Common providers include banks, life insurance companies, agencies (for multifamily), and CMBS lenders.
When to Use Permanent Financing
Permanent financing is the right choice when:
The property is stabilized with consistent occupancy and cash flow
You’re looking to maximize leverage at a lower interest rate
You want to lock in long-term, fixed-rate debt with amortization
Your investment strategy includes holding the asset for 5+ years
Key Differences at a Glance
Term: Bridge loans (1–3 years) vs. permanent loans (5–30 years)
Use Case: Transitional properties vs. stabilized assets
Interest Rate: Higher for bridge, lower for permanent
Repayment: Interest-only vs. amortizing
Speed: Bridge loans offer faster closings and more flexibility
Our Role at i95 Capital
We help real estate investors determine which loan structure best fits their strategy. Whether you need fast capital to close a time-sensitive deal or you’re ready to lock in permanent debt after stabilization, we’ll structure and source the right financing from our network of institutional and private capital providers.
Let’s Talk About Your Next Deal
Looking for bridge financing, permanent debt, or both? We can help you plan the full lifecycle of your capital stack.
👉 Submit Your Deal or Contact Us to start the conversation.
