Bridge and hard money loans
Short-term loans secured on real estate, to buy, fix up or carry a property until it can be sold or refinanced. Hard money comes from private lenders who look mostly at the property; it is fast but expensive, and you can lose the property if the exit does not happen.
- Secured on assets
How it works
Bridge loans. The Office of the Comptroller of the Currency (OCC) describes a bridge loan as short-term financing for a newly built or newly bought commercial property until it is leased up and its income is stable, usually for up to three years, so it can be sold or qualify for a long-term (permanent) loan. Banks make them as well as other lenders.
Hard money loans. California's legislative analyses describe hard money lending as loans from private individuals and small pension plans, often pooled by brokers, to people and businesses. They describe it as common in real estate and construction, with short terms, high interest and relaxed underwriting: most hard money lenders lend on the deal or the property itself, and only up to a share of its market value, so that they are covered if they must foreclose. It is often used to buy a run-down property and renovate it.
The exit is everything. Both kinds depend on what happens at the end: a sale, a refinancing onto a long-term loan, or the property earning enough. If the exit is late or falls through, you may face extra fees or foreclosure, depending on the agreement. The OCC warns that falling property values can make it hard to refinance.
Read the agreement for: the rate and points (upfront fees as a percentage of the loan), extension and exit fees, prepayment terms, how much of the property's value the lender will lend, any personal guarantee, and what counts as a default.
Upsides and downsides
Upsides
- Can be quick, because hard money lenders look mainly at the property
- Bridges a gap until a property can be sold or refinanced
- Works for properties banks will not yet lend on for the long term
Downsides
- Hard money is expensive, with high interest and upfront fees
- Short terms leave little room if your plans slip
- Lenders lend only part of the property's value
Risks
- You can lose the property if you cannot repay at the end of the term
- Falling property values can stop you refinancing
- Extra fees or a higher rate if the exit is late, where the agreement allows them
What it costs
- How it is priced
- Interest and upfront fees (points) set by the lender, high for hard money
- Costs that are easy to miss
- Upfront points, and fees for extending the loan where the agreement charges them
- Exit fees, and the costs of the long-term loan or sale that repays it
- Appraisal, legal and title costs
A share of the property's current or finished value, set by the lender.
Have a quote? True cost of a loan: work out the APR and total cost
Does it fit?
Could fit when
- You need to buy or renovate a property quickly and will sell or refinance it later
- You own property and need short-term money until a sale or refinancing
Unlikely to fit when
- You neither need property nor own any to borrow against
- You need long-term money with no sale or refinancing in view
Who can use it
- Business types: Sole proprietorship, Partnership, LLC, S corporation, C corporation, Benefit corporation, Cooperative
- Open to businesses with no sales yet
- Real estate to secure the loan, with enough value to cover it
- A clear exit, such as a sale or a long-term loan, before the term ends
Am I ready?
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- Exit plan
- Property details
- Renovation costs
Regulation and protections
Regulators: Office of the Comptroller of the Currency (OCC); Federal Deposit Insurance Corporation (FDIC); Federal Reserve; State lending and financial regulators.
Who runs it: Private providers, nationwide.
Banks that make bridge loans are supervised by their regulators. Private lenders and the brokers who arrange their loans follow state law: in California, for example, brokers are licensed under the Real Estate Law, and those who arrange loans funded by private investors face extra supervision. Federal Truth in Lending rules do not cover business loans, and the state commercial financing disclosure laws on this site leave out loans secured by real property, so ask for every cost in writing.
Types of provider: Banks, for bridge loans on commercial property; Private and hard money lenders, and the brokers that arrange their loans.
Also consider
What has changed
No changes since this page was published. It was last checked against its sources on October 20, 2026.
Sources
- OCC Comptroller's Handbook: Commercial Real Estate Lending (version 2.0, March 2022): bridge loans · checked October 20, 2026
- California State Assembly, Committee on Banking and Finance: analysis of AB 2288 (April 2010), on hard money lending · checked October 20, 2026
- California Senate: floor analysis of SB 978 (August 2012), on hard money lenders and brokers · checked October 20, 2026
- 12 CFR 1026.3 (Regulation Z): exempt transactions, including business credit · checked October 17, 2026
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