What is the difference between a bridge loan and a mezzanine loan?
A bridge loan is a short-term loan which “bridges” the Borrower’s plan from point A to point B. The Borrower only needs financing for a very short time frame so a long-term fixed rate loan is not the solution. For example, a Borrower may currently be in the process of selling his office building so that he can purchase a multi-family building, however the money from the sale of his office building has not come through yet and needs to close on the second property. Therefore, the Borrower needs a bridge loan so he can buy the second property, and then when the sale of the first property happens he can pay down the bridge loan. A mezzanine loan can be a type of bridge loan in the sense that it is short-term and not permanent financing. However a mezzanine loan is not secured by property, it is secured by an ownership interest in the company that owns the property. This occurs when the Borrower needs more money than he is able to borrow against the property, so he puts up an interest in h
