Many companies find they need a relatively short term bridge loan secured by real estate or equipment, or both. The bridge provides requisite liquidity immediately, and then the bridge loan financing is taken out by more permanent financing at the end of the term of the bridge loan financing. The following are case studies of recent bridge loan financings provided by The London Manhattan Company for its clients.
Bridge loans secured by real estate are often called “hard money loans.” Hard money bridge loans offer lower loan to value percentages, and focus exclusively upon the collateral value of the real estate securing the hard money loan. Since the ltv (loan to value) ratios are lower with hard money bridge financing than with conventional real estate loans, the hard money lender can dispense with the requirement for debt service coverage and cash flow analysis of the borrower that would be required with conventional real estate financing.
Bridge Loan Case Study 1: Real Estate and Equipment Bridge Loan Financing
The London Manhattan Company is pleased to announce it recently found Real Estate and Equipment Bridge Loan Financing for a manufacturing client in the plastics industry. This financing provided substantial and desperately needed new liquidity for the borrower.
The Situation:
The borrower was a historically profitable manufacturer with approximately $18 million in annual sales. The company experienced severe operating difficulties during a two year period. As a result, the borrower developed a pronounced need for additional new liquidity. The Bridge Loan provided immediate relief from cash flow difficulties, and follow on permanent facilities from other lenders took out the Bridge Lender.
This Bridge Loan Financing had the following attributes:
Amount Financed: $6.15 Million
Facility Structure: Bridge Loan
Collateral for Bridge Loan: Real Estate and New and Used Equipment
Term: Twelve Months
Bridge Loan Takeout (Exit): Provided by Permanent Real Estate and Equipment Financing from other lenders
Bridge Loan Case Study 2: Real Estate Bridge Loan Financing
The London Manhattan Company is pleased to announce it recently found hard money real estate financing for a manufacturer located on the east coast of the US.
The Situation:
This manufacturing borrower had a long history of successful operations. The company had originated financing with a local bank which sold that debt to another institution. Following a dispute with the debt purchaser, one of the company’s operating subsidiaries was forced to declare bankruptcy. This bankruptcy and weak trailing debt service coverage made conventional real estate financing unavailable. We arranged a hard money real estate loan which provided much needed working capital for the company.
This real estate hard money financing had the following attributes:
Loan Amount: $2.2 Million
Subject Property: Large manufacturing plant located in an industrial area
Structure for Deal: Hard Money
Loan Term: Two Years
Loan To Value: Maximum 65% of Lender’s Opinion of Value
Collateral: 1st Position Lien on Property
Prepayment Penalty: Yes; Stepped Down Over Loan Term
If you need a bridge loan or hard money loan, please call us to discuss your requirements. We have many different programs available that can be tailored to satisfy the specifics of your situation.