Insights | October 27, 2022
Benefits of Bridge Loans in Seniors Housing
A bridge loan, or short-term capital, is a specialized tool that benefits a variety of circumstances when seeking financing solutions for seniors housing, senior living, and healthcare. Read on to explore the benefits and flexibility bridge loans bring to the table.
Less Restrictions, More Flexibility
Because bridge lenders are not regulated the same way traditional lenders (banks) are, it means that bridge lending is not subject to the same market impacts and underwriting restrictions that banks have. Rules and regulations for banks ebb and flow with the economic tide. In an environment of economic uncertainty, like inflationary costs and talks of a recession, private, short-term capital sources can fill gaps that traditional lenders cannot. When there is turbulence in the market, that translates to banks tightening their credit box and imposing additional restrictions within their lending parameters. This impacts the availability of capital and how easy or hard it is to access. In these scenarios, bridge loans offer less restrictions and more creative solutions for seniors housing finance.
Timing Translates to Speed
When traditional capital is increasingly hard to come by, senior living owners and operators need an efficient and timely solution to continue to push business objectives forward. A bridge loan, or interim financing, can provide that flexibility and creativity. On average, it takes a bank approximately 120 days to close a transaction. Compare that to bridge lenders, where transactions routinely happen within 15-45 days. Although there is a premium for that speed in the form of a higher interest rate, seniors housing owners and operators looking to finance value-add or opportunistic acquisitions involving an assisted living facility or a continuing care retirement community (CCRC), gain a competitive advantage by leveraging the flexibility and speed of a bridge loan. Even the best of deals, during the best of times, aren’t always funded by traditional lenders. A particular strategy may not fit a traditional loan structure, such as the desire to sell a property quickly upon stabilization. If a traditional loan has a substantial prepayment penalty, it may not be a fit. In such an event, bridge loans may be a smart alternative to ensure the project stays on track, builds a viable bridge to profitability and stabilization, and provides the flexibility for an anticipated sale.
A bridge loan isn’t the answer to every scenario, but neither is traditional bank financing. Seniors housing owners and operators should look at a partnership with a bridge lender as a savvy solution in a diversified financial toolkit that offers reliable options for pursuing short-term financing and advancing business objectives.
Learn more about Wilshire Finance Partner’s bridge lending program for seniors housing and senior living here or call us at (866) 575-5070.
Wilshire Finance Partners is a real estate finance and investment company specializing in bridge loans and capital solutions for senior living and healthcare from $1 million to $10 million nationwide. Wilshire finances a variety of property types in senior living, including assisted living, independent living, continuing care retirement communities, life plan communities, memory care and skilled nursing facilities, healthcare facilities, and more.