Bridge Loans in Acquisitions: When Speed Is Worth the Spread

A 12-month bridge at 10% can be the cheapest money in the stack — if it buys certainty of close and a clean bank takeout.

Bridge financing carries a reputation for being expensive. On the right deal, at the right moment, it's the cheapest capital in the stack — because the alternative is losing the deal.

When a bridge is the right call

• Signed LOI, seller pushing to close inside 45 days. SBA can't hit it. Most banks can't either.
• Bank financing conditionally approved but taking another 60–90 days for full underwriting. Bridge in, take out with the bank later.
• 1031 exchange or estate-driven timeline. The seller has a hard external clock.
• Auction process where cash-equivalent certainty wins over price.

What we arrange

Typically 6–18 month interest-only, 9–12%, no prepayment penalty. Collateral is usually the target's real estate and equipment plus a lien on the operating entity. We underwrite the takeout at the same time we underwrite the bridge — so the exit is committed, not hoped-for.

The math

A $5M bridge at 11% for 9 months costs roughly $415K in interest. On a deal where the alternative is walking away or paying a re-trade of $500K+, the bridge is accretive on day one — and it's non-dilutive.

Bridges get expensive when they don't get taken out. That's a structuring problem, not a bridge problem.