Understanding Bridge Loans and Commercial Warehouse Lines: A Guide for Business Owners

Jun 19, 2024

Understanding Bridge Loans

What is a Bridge Loan?

A bridge loan is a short-term financing option designed to provide temporary funding during a transitional period. Typically, these loans are used to "bridge" the gap between the purchase of a new property and the sale of an existing one. However, their utility extends beyond real estate transactions.

Key Features of Bridge Loans

Short-Term Duration: Bridge loans usually have a term of six months to three years.
Quick Approval and Funding: Designed for speed, these loans often come with a streamlined approval process.
Higher Interest Rates: Reflecting their short-term nature and higher risk, interest rates on bridge loans are higher than those of traditional loans.
Collateral Requirements: The property or asset usually secures these loans being financed.

business loan

When to Use a Bridge Loan

Bridge loans are ideal for scenarios where immediate access to funds is necessary. Common use cases include:

Real Estate Transactions: When you need to purchase a new property before selling an existing one.
Business Opportunities: When an immediate investment opportunity arises, that requires quick capital.
Renovation Projects: When a property needs to be renovated to increase its value before securing long-term financing.

Commercial Warehouse Lines

What is a Commercial Warehouse Line?

A commercial warehouse line, often referred to simply as a "warehouse line," is a type of revolving credit facility used by mortgage lenders to fund loans. They originate until can be sold in the secondary market. Although traditionally associated with mortgage lending, the concept can be adapted for other types of commercial financing.

Key Features of Commercial Warehouse Lines

Revolving Credit Facility: Operates similarly to a line of credit, allowing for continuous borrowing and repayment.
Short to Medium Term: Typically designed for shorter durations, often up to a year.
Secured by Collateral: Usually secured by the loans or assets being warehoused.
Interest on Drawn Amounts: Interest is charged only on the amounts drawn from the line.

When to Use a Commercial Warehouse Line

Warehouse lines are handy for businesses managing large volumes of short-term financing. Scenarios where they are beneficial include:

Mortgage Lending: To finance loans until sold on the secondary market.

Inventory Financing: For businesses needing to purchase inventory in bulk and sell overtime.
Operational Cash Flow: To manage the working capital needs of a business with fluctuating cash flow requirements.

warehouse storage

Choosing the Right Financing Option

Deciding between a bridge loan and a commercial warehouse line depends on your specific financial needs and business circumstances.

Bridge Loan: Best suited for short-term, onetime financing needs where quick access to funds is critical, such as real estate purchases or urgent business opportunities.
Commercial Warehouse Line: Ideal for businesses requiring ongoing access to funds to manage inventory, loan origination, or other operational needs.


Understanding the benefits and, appropriate use cases for bridge loans and commercial warehouse lines can help your business stay agile and financially healthy. At Atlantic Commercial Lending, we’re here to guide you in finding the best financing solutions for your business. Contact us today to learn more about how we can support your financial needs.