Bridge loans are powerful tools in commercial real estate. They offer speed, flexibility, and access to capital when traditional financing isn’t an option. But they also come with risks, and sponsors who don’t fully understand them can make costly mistakes.
At Solomon Stanley Financial, we’ve seen how even experienced investors can fall into common traps with bridge lending. Our role is not just to secure capital, but to help structure it wisely, so it supports the long-term success of the project, not just the close.
Here are five of the most common mistakes we help clients avoid, and how a strategic approach to bridge financing can make all the difference.
1. Relying on a Weak or Unrealistic Exit Strategy
Every bridge loan needs a clearly defined exit. That might mean refinancing into a permanent loan, selling the asset, or securing new equity. But too often, sponsors underestimate how much time or execution risk that exit truly involves.
Loans structured on vague or overly optimistic assumptions—like lease-up happening faster than market trends support—can leave you cornered when maturity approaches.
At Solomon Stanley, we help clients stress-test exit scenarios before funding. We ask hard questions, build backup plans, and, when possible, pre-arrange take-out options to reduce exposure.
2. Overleveraging the Capital Stack
Bridge loans can offer higher loan-to-cost or loan-to-value ratios than conventional debt. While this can preserve equity or improve returns, overleverage can also introduce major risk—especially if market conditions shift or renovations don’t go as planned.
We often encounter deals where sponsors stretch the capital structure too far, assuming everything will go smoothly. The problem is that real estate rarely behaves on schedule.
Our approach is to balance leverage with flexibility. That might mean reducing loan proceeds slightly to allow for interest reserves, or structuring terms that provide time extensions if stabilization takes longer than expected.
3. Focusing Only on the Interest Rate
Bridge loans are priced higher than permanent financing, that’s expected. But one of the most common mistakes is evaluating them based solely on rate. In reality, other terms often have far more impact on the success of the loan.
Prepayment penalties, extension fees, recourse, draw schedules, and reserve requirements can all affect your ability to execute.
Solomon Stanley helps clients look at the full cost of capital, not just the interest rate. We negotiate for flexibility where it matters most and ensure the loan structure matches the business plan, not just the lender’s model.
4. Choosing the Wrong Lending Partner
Speed and pricing are important, but so is trust, transparency, and alignment. Sponsors who partner with lenders that don’t understand the deal, overpromise and underdeliver, or apply last-minute changes at closing often pay a much higher price than expected.
We’ve seen deals collapse due to communication breakdowns or capital sources pulling out late in the process. That’s why we only work with lenders who move reliably and underwrite with clarity from day one.
Through our network of private lenders, funds, and specialty capital providers, we connect clients with the right partner—not just the fastest or cheapest one.
5. Underestimating Timeline and Execution Risk
Bridge loans are short-term by design. That means time matters. If permitting delays, construction hiccups, or leasing takes longer than expected, your runway can shrink fast.
Sponsors who don’t build in buffers—or who wait too long to line up their exit—can find themselves trapped in an expensive refinance scramble or forced to accept unfavorable terms.
We help avoid this by planning not just the funding phase, but what happens six, nine, or twelve months into the hold. If timelines shift, our team is ready with contingency options and capital strategies that preserve your flexibility and control.
The Solomon Stanley Difference
Bridge financing isn’t complicated—it’s just unforgiving when approached without a strategy. At Solomon Stanley, we treat each loan as part of a broader capital roadmap. We don’t just ask “Can we close this?” We ask, “Will this work six months from now?”
That means:
- Aligning loan terms with realistic execution timelines
- Negotiating flexibility into the documents, not just the deal summary
- Working with lenders who understand the real estate, not just the math
- Helping clients protect their upside and control their exit, even when things change
If you’re considering a bridge loan—or already have one in motion—we can help you structure it with foresight and confidence. Mistakes in financing can be expensive. The right capital strategy helps avoid them before they happen.
