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Lend America partners with the Rainy Day Foundation to support Homeowner Education and Loan Protection Program

National Mortgage Professional
Apr 30, 2008

Bridge capital is alive and wellDarin YoungBridge capital, bridge loans, Hawkins Capital It is an unusual day in today's market for my company to not get a call from a developer looking for capital where a traditional lender has stopped funding a project. Amidst the credit crunch funding for many projects has simply ceased all together. So what are the advantages of bridge capital? Speed of execution Bridge transactions can be closed in as little as five business days without the need for an appraisal prior to funding. Term to one-year Bridge transactions can be structured from one to 12 months, with extensions possible allowing a project to be completed, rehabbed, leased, sold and/or stabilized for permanent financing without prepayment penalties. Creative structure In many cases, existing projects may not have sufficient equity. Bridge transactions can often be structured using cross collateral allowing a project to be completed without additional capital investment by the developer/investor. Cash out Amidst the "credit crunch" many developers/investors have lost liquidity. Cash out transactions can be structured on existing income producing commercial property providing instant liquidity to the developer/investor. Distressed asset workouts Since bridge transactions are asset based, credit and income are secondary. If sufficient equity exists in real estate assets a workout transaction can usually be structured to save a distressed asset. Costs While interest rates and points are higher than traditional financing, bridge capital is significantly less expensive than equity. Overall, bridge capital can be a valuable tool for a developer/investor enabling an asset to be completed, rehabbed, leased, sold or stabilized. Darin Young is a business development officer for Hawkins Capital, a direct lender based in Salt Lake City, Utah. He may be reached at (801) 936-5100 or e-mail [email protected]
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