Bridge loans are just that, interim loans to “bridge” the gap between the current situation and the exit strategy. Bridge loan candidates typically have some cash flow, but for various reasons will not currently qualify for conventional lending.
For example, if a property is cash flowing but only 47% occupied, it would most likely not qualify for conventional financing. Investors with a keen eye for value-add opportunities finance these properties with the end goal of getting them fully leased and stabilized.
Bridge financing is characterized by relatively expensive pricing (usually fall in the 9-12% range). Bridge loans are usually extended for a predetermined amortization period (although costly extensions are often available).