Short-term loans tend to be expensive for investors and small businesses, but that is usually because they are unsecured, which raises the risk to the lender. That is why real estate bridge loans have become so popular. Not only do they offer fast closings and ready working capital, they also control the cost of that capital by using a piece of property for collateral. If you are wondering what you can do with a bridge loan, it’s a good idea to review the most common applications other borrowers have found for this dynamic product.

1. Flipping Houses or Storefronts

Short-term loans are great for home flippers and even those working on turning commercial real estate, like the investors who buy and improve retail and office sites. Securing the loan with the property being purchased means you do not have to risk another piece in your portfolio, and the high LTVs offered by bridge loans make it easy to put your own capital to work on the improvements. That is why bridge loans are the most popular type of loan for property flippers in most states.

2. Renovating Existing Income Properties

If you already own a property and it could use an overhaul to increase its income potential to the area’s market cap, you’ve got all the tools you need to do it. Using a bridge loan against the equity in the building allows you to quickly make the changes, fill it with tenants, and build the income needed to take care of the loan. Since there are no prepayment penalties, working fast means saving yourself serious money on the estimated interest too.

3. Working Capital Loans for Your Business

Bridge loans are favored heavily by real estate investors, but they are a universally useful tool for any business with property investments, even if the only property you own is the one where your operations are located. When you take out a bridge loan for working capital, you get access to a large sum and the time you need to really make it work. Many companies use these loans for long-term operational capital, setting aside income to reach the payoff total early and then refinancing. It’s an easy way to weather financial uncertainty without incurring the high costs associated with many other short-term credit instruments.

If you are looking to make the most of equity in your properties or trying to close quickly on a new purchase, you should consider what a bridge loan could do to help your situation. You would be surprised how often it winds up being the perfect answer to a complex cash flow issue.