As the saying goes, " Good things come by many names".
Essentially, these are all loans with the same structure and purpose, but they are formulated and marketed differently by various lenders.
The terms mortgage loan and commercial loan secured by real estate are closely related. A mortgage loan refers to a loan in which a mortgage is placed on the borrower’s property as collateral, typically through a notary. A commercial loan secured by real estate has the same meaning, but it specifically applies to businesses. In this case, the borrower is a company that pledges its property as collateral and mortgages it.
The term commercial loan also refers to the purpose of the loan, which is generally to finance a specific business transaction and generate profit for the company.
A mortgage loan for a company—or, in other words, a commercial loan secured by real estate—is not limited to the real estate sector. Entrepreneurs from various fields often use such loans.
Kõiki neid olukordi iseloomustab vajadus teatud ettevõttele oluline äriline toiming või tegevus lõpuni viia. Selline kapitalivajadus on üldjuhul lühiajaline, mistõttu on ka pakutavate laenude tähtajad lühikesed – keskmiselt üks aasta, kuid tihti maksavad ettevõtjad juba 6-12 kuu möödudes laenu tagasi. Selliselt ei ole intressikulu ettevõtte äritehingu vaatest liiga kulukas ning ettevõttel on võimalik laenu abiga tehing lõpuni viia ning ka kasumit teenida.
There are many examples of commercial loans secured by real estate. For instance, an agricultural company may need to purchase seeds and fertilizers before the deadline for receiving state subsidies, a manufacturing company may require capital to stock up on materials or buy new equipment to fulfill a large order, or a transport company may need additional funds to purchase new vehicles. bridge loan. Sildlaen viitab sillale, mille eesmärgiks on rajada nii-öelda sild kahe äris olulise verstaposti – toimingu, toote või teenuse lõpuni viimise ning kliendilt selle eest raha saamise vahel.
In all of these cases, there is a need to complete an important business operation or transaction. These capital requirements are usually short-term, which is why the loans offered are typically short-term as well—averaging around one year. Entrepreneurs often repay these loans within 6 to 12 months. This arrangement keeps interest expenses manageable in relation to the business transaction, enabling the company to complete the deal and make a profit.
In real estate sector, a bridge loan is used in various scenarios, particularly during the buying and selling process. Real estate entrepreneurs often have capital tied up in property that is being value added or developed. But new investment opportunities frequently arise in the real estate market. To seize these opportunities, entrepreneurs can use existing real estate, the property they are purchasing, or both as collateral for a bridge loan, allowing them to raise capital and avoid missing out on emerging investments.
However, the term bridge loan is primarily used in the real estate sector in many parts of the world.
Another common use of a bridge loan is in “flipping” real estate, where an investor may have the funds to purchase a property but lacks the capital to renovate or add value to it. Since the renovation process is typically short-term, a bridge loan can serve as a temporary solution to cover costs until the property is renovated and sold.
Major real estate developers also use bridge loans to purchase development projects and prepare them for construction. For example, land might be bought using a bridge loan, followed by project preparation, obtaining building permits, and beginning of sales. Once the project progresses, the bridge loan is often refinanced with a development or construction loan from a bank. To sum it all up, a mortgage loan, bridge loan, and commercial loan secured by real estate all generally serve the same purpose—addressing a company’s short-term capital needs. However, it’s helpful to understand the specific meanings of these terms and their context in the business world.