Last updated: May 2025
A bridge loan is a short-term, asset-based financing solution that enables real estate investors to act quickly, making it an ideal option for purchasing commercial property at auction.
Bridge loans offer minimal paperwork, fast approvals, and no traditional income verification, allowing investors to close transactions much faster than conventional loans.
Most investors refinance or sell the property after closing. Short-term real estate financing is ideal for time-sensitive transactions, such as auctions, where delays can result in lost deals for investors.
In this article, we’ll answer common questions such as:
- What credit score do I need for a bridge loan?
- How fast can I close with a bridge loan?
- Can I use a bridge loan for distressed properties?
- What if I can’t refinance in time?
Learning how bridge loans work means knowing how to access a highly effective tool for expanding your real estate portfolio through auction opportunities.
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Using a bridge loan to buy commercial real estate at auction
In most auction settings, using a bridge loan to buy commercial real estate can increase your purchase power and responsiveness in a highly competitive field. These short-term loans are designed to help investors buy property quickly, especially when time is tight.
Resorting to a conventional loan for an auction can be problematic due to their slow approval process. Traditional lending practices can require weeks of underwriting and income verification.
Bridge loans instead rely on the property’s value and your exit strategy. Bridge loans are also usually interest-only, ranging from 6 to 18 months, and are structured to close fast, often in just days.
Why investors use bridge loans at auctions
Because commercial property auctions move quickly, investors often turn to bridge loans to meet tight deadlines.
Winning bidders typically have 7 to 30 days to determine the full purchase amount, and conventional lending practices can’t always move that quickly.
Auction financing for investors requires speed, flexibility, and asset-focused underwriting—features typically found in non-bank commercial property funding. Lengthy appraisals, document reviews, and income verification often hamper traditional banking.
A bridge loan for commercial real estate auctions can allow investors to act immediately when opportunities arise.
Key features of a bridge loan for auction deals
In addition to high loan-to-value ratios of up to 70%, bridge loans created for auction scenarios may include helpful features like:
- Fast closings (usually 5–10 business days)
- Interest-only payments, which help keep monthly costs low
- No income verification, especially for experienced investors
- Flexible exit strategies, like resale, refinance, or lease-up
- Asset-based underwriting, meaning the deal hinges on the property and your plan, not your credit report
Investors can gain a valuable competitive edge if the lender can move fast and has experience in auction scenarios.
What’s the difference between traditional bridge loans vs. hard money loans?
Hard money loans typically have higher rates and shorter terms due to the added risk and speed involved.
Non-conforming loans (non-QM loans) may also be used for distressed properties if your project involves major rehab or by borrowers with unusual credit profiles—options not typically available through banks.
Because auctions often have strict timelines, private money loans may offer the fastest path to acquisition.
Regardless of the type of lender you choose, a bridge loan applicant typically needs to provide:
- A realistic exit plan (sale, refinance, lease-up)
- Basic property information and comparable values
- The auction notice or purchase agreement
- A summary of your investment experience (if available)
- Any existing liabilities or concurrent projects
Hard money lenders often prioritize deal strength and investor credibility over traditional banking metrics.
What are the steps to qualify for a bridge loan?
Investors who are interested in a property in an upcoming auction don’t have to wait until they win to secure financing.
Here’s how to prepare for a bridge loan before the auction:
- Get pre-qualified: Contact a bridge loan lender with your investment strategy or idea to see what preliminary offer is available immediately.
- Submit property details: Provide the auction listing, estimated value, and your intended exit strategy.
- Underwriting Review: The lender will review your file and, if accepted, deliver terms based on the property and timing.
- Receive proof of funds: This confirms your financing details, allowing you to plan your purchase strategically during bidding.
Bringing your pre-qualification documentation to the auction can enhance credibility and help streamline the post-auction closing process.
Risks of using a bridge loan at auction and how to avoid them
Any financial tool will have certain risks involved, including bridge loans. However, smart planning can reduce them.
Potential bridge loan risks
- Not being able to refinance before the loan matures
- Market shifts reducing resale value or rental demand
- Hidden property issues that weren’t disclosed
- Higher rates and fees compared to bank loans
Ways to mitigate bridge loan risks
- Have a clear, realistic exit strategy
- Confirm the property’s value and condition ahead of time
- Understand all auction rules and timelines
- Work with experienced lenders who understand auction dynamics
How do you exit a bridge loan successfully?
First and foremost, before bidding at auction, ensure you have a defined exit plan in place. Common exits include:
- Refinancing into long-term financing (e.g., a commercial mortgage or SBA loan)
- Selling the property for a profit after light improvements
- Leasing the property to generate income, then refinancing later
FAQ: Bridge loans for auctioned commercial real estate
No set minimum. Bridge loans focus on the asset and your plan, not your credit score.
Hard money bridge loans can close in as little as 5 to 10 business days, depending on the deal and how quickly requested material is received.
Yes, especially if the long-term plan is resale, rehab, or lease-up.
Many lenders offer short-term extensions for a fee. Always communicate early and have a backup.
Bridge loans can give you an edge at auction
A commercial property bridge loan can be ideal for fast closing on properties based on their potential value.
With a pre-approved bridge loan, you can position yourself to win high-stakes auctions and secure properties others can’t.
Contact Marquee Funding Group with your auction scenario right now.Let’s see how we can secure the property to accelerate your bottom line.