A bridge loan is exactly what the name implies: a short-term capital solution that gets you from where you are to where you need to be. In Texas real estate, that gap appears constantly — between purchase and permanent financing, between construction completion and stabilization, between a maturing bank loan and a viable refinance. Private bridge lending exists to fill that gap quickly and on terms that make the deal work.
This guide explains how private bridge lending works from the borrower's perspective — how the loans are structured, when they make sense, what the process looks like with BD Lending, and what it actually costs. No jargon, no fluff.
What Is a Private Bridge Loan?
A private bridge loan is a short-term, asset-secured loan originated by a non-bank lender using private capital. Unlike a bank, a private lender doesn't rely on depositor funds, regulatory reserve requirements, or FDIC oversight. That structural difference is the entire reason bridge loans can close in days instead of months.
At BD Lending, we originate bridge loans secured by Texas real estate — primarily commercial properties and residential construction projects. The loan is always underwritten against the asset. Your business plan, execution track record, and the quality of the collateral matter. Your W-2 income, your debt-to-income ratio, and your personal balance sheet matter a lot less.
Hard money bridge loans and private bridge loans are often used interchangeably. The practical difference is minimal: both describe short-term, asset-based lending at higher rates than bank financing, originated outside traditional institutional channels.
When Does a Bridge Loan Make Sense?
Three use cases account for the vast majority of bridge loan demand in Texas:
Acquisition. You've identified a deal — an off-market multifamily, a distressed retail strip, a lot for a spec build — and the seller wants to close in 30 days or less. A bank can't move that fast. A bridge loan can. The asset secures the loan; execution is your equity contribution.
Refinance. Your bank note is maturing and you're not ready for permanent financing. Maybe the property isn't fully stabilized. Maybe rates moved against you. Maybe you need cash out to fund another project. A bridge loan buys you time and capital while you work the asset toward a cleaner long-term exit.
Construction. Ground-up or significant renovation projects require draw-based financing tied to construction milestones. Private bridge lenders are set up to manage draw schedules in ways that most banks are not, especially on smaller or non-institutional projects.
In all three cases, the common thread is speed and flexibility — two things institutional lenders structurally cannot provide at the pace Texas markets demand.
How BD Lending Structures Bridge Loans
Our loan structure is straightforward and consistent. Understanding it upfront saves time for everyone.
| Parameter | BD Lending Standard |
|---|---|
| Loan-to-Cost (LTC) | Up to 90% |
| Loan-to-ARV | Up to 70% |
| Governing Limit | Lower of LTC or ARV |
| Rate | 11–13% interest-only |
| Origination Fee | 2–3% |
| Term | 12–18 months (typical) |
| Extensions | ~1% per extension period |
A few mechanics worth understanding:
Interest accrues on the full committed amount, not just what's drawn. On a construction loan with a $500,000 holdback, you pay interest on the full loan from day one — not only on funds disbursed. Factor this into your carry cost model before you sign a term sheet.
The ARV cap is non-negotiable. We underwrite to after-repair value, not aspirational value. The 70% ARV limit exists to protect both the borrower's equity position and our collateral. If an appraisal supports it, the number works. If it doesn't, the loan gets sized down, not the underwriting standard.
Interest-only means no principal reduction. Monthly payments service only the interest. Principal is due at maturity or payoff. This improves your cash flow during the loan term but means your full exit — sale or refi — must execute cleanly.
The Process: Prequal to Close
BD Lending's origination process has four stages, and we move fast through each:
Prequal. Submit basic deal parameters — property type, location, purchase price or cost basis, estimated ARV, and your business plan. We review and respond quickly. If the deal is in the ballpark, we move to review. If it isn't, we'll tell you why. Start your prequal here.
Underwriting review. We review the asset in detail — title, appraisal or valuation support, borrower track record, and project specifics. For construction loans, we review the budget and draw schedule. We are asking: does the collateral support the loan, and does the borrower have the track record to execute?
Term sheet. If underwriting confirms the deal, we issue a term sheet reflecting the final loan structure. No ambiguity — rate, term, LTC, origination, extensions, and all key conditions are in writing before you proceed.
Close. Once the term sheet is executed and conditions are satisfied, we move to close. Title coordinates, funds wire, and you're in the deal.
Who Uses Private Bridge Loans — and Why
The typical BD Lending borrower is not someone who couldn't get bank financing. They're someone who chose not to wait for it. Our borrowers include:
- Experienced Texas investors acquiring time-sensitive deals
- Developers funding ground-up residential or light commercial construction
- Operators refinancing out of maturing bank notes on transitional assets
- Sponsors pulling cash out of equity-rich properties to fund new acquisitions
The common profile is execution-oriented, deal-focused, and operating in markets where speed creates returns. These borrowers understand that paying 11–13% for six months is often far cheaper than losing a deal to a 45-day bank process — or carrying an asset through a rate environment that no longer supports conventional financing.
What Bridge Lending Costs — Honestly
Bridge loans cost more than bank financing. That's the trade. Before committing, model your total cost of capital accurately:
- Origination fee: 2–3% of loan amount, typically paid at close
- Interest: 11–13% annualized, interest-only, on the full committed amount
- Extension fee (if needed): ~1% per period
- Third-party costs: appraisal, title, legal — same as any real estate transaction
On a $1,000,000 bridge loan at 12% for 12 months with a 2% origination fee: you're looking at roughly $120,000 in interest plus $20,000 at close. If the deal returns 20–30% on equity, that cost of capital is not the constraint. If the deal barely pencils at 6%, bridge financing isn't your problem — the deal is.