A bridge loan is short-term capital that gets you from one event to another: from a signed purchase agreement to a bank mortgage, from a partner’s exit to a refinance, from a CRA assessment to a payment plan the business can live with. It is priced for speed and flexibility, not for the lowest rate, and it only makes sense when the exit is real.
When a bridge is the right tool
- A commercial property purchase with a firm closing date the bank cannot meet.
- Buying out a partner or a retiring founder before the bank’s annual review.
- Clearing CRA arrears so the business can return to normal banking.
- Carrying a development through lease-up until it qualifies for conventional take-out financing.
What it should cost
Expect an annual interest rate above a bank line, a lender fee at closing, and third-party costs for appraisal, legal and registration. A fair term sheet shows all three separately. Be wary of any lender who will not state the annual rate in writing. Under the federal Interest Act, a rate quoted only for a period shorter than a year is limited to five per cent a year unless the contract also states the annual equivalent, so honest lenders put it on the page.
Structure the exit first
The best bridge is one you never have to extend. Before signing, agree with the lender on what the exit looks like, when it happens and what triggers it. If the exit is a bank refinance, start that conversation on the day the bridge funds, not six months later. Our term sheets include a minimum interest period and open prepayment after it, so a borrower who exits early is rewarded rather than penalized.
Have a situation like this? Tell us about the deal and a principal will respond within two business days. Cascade lends to businesses only, in Canadian dollars, and every rate we quote is an annual rate.
