Bridge Loans
Bridge loans are short-term financing for transitional assets. They are typically used for acquisitions, repositioning, lease-up, or temporary capital needs prior to sale or refinance.
Construction Loans
Construction loans are designed for ground-up construction or heavy renovation where capital is advanced via a draw schedule tied to project milestones.
Key Differences
- Disbursement: bridge is often funded up-front; construction uses draws.
- Risk profile: construction carries execution and completion risk.
- Documentation: construction requires budgets, inspections, and controls.
- Exit: both require exits, but construction exits rely heavily on completion and stabilization.
Choosing the Correct Tool
If the project requires controlled disbursements and oversight, construction financing is usually more appropriate. If the property is transitional but not a true construction scenario, bridge capital may be the cleaner tool.
Quiet conclusion: The right structure reduces friction. The wrong structure creates delays.
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