Bridge Loan Retractions

Not long ago, bridge loans were the reliable go-to for real estate developers. They filled the gaps, provided speed and flexibility, and allowed acquisitions or value-add plays to get off the ground quickly. Today, that landscape looks very different. As market uncertainty grows and interest rates remain volatile, many bridge lenders are pulling back. And those still active? They’re tightening terms, pricing in more risk, and reducing loan proceeds, especially if your exit strategy depends on refinancing in the next 12 to 24 months.

For commercial real estate developers, this shift presents a very real challenge. Deals that once made sense on paper now demand more rigorous planning, stronger financials, and smarter backup options. If you’re looking at bridge debt for your next project, the path forward requires more than just optimism and a handshake.

Here’s what you need to know, and what you should be doing to stay ahead.

Lenders Are Adjusting Their Risk Lens

Bridge lenders are operating under a new mindset. Where once they might have leaned into future upside and pro forma projections, they’re now far more concerned with risk exposure. That means shorter loan durations, higher rates, more conservative underwriting, and lower leverage. If you were expecting 75% LTC, you might be looking at 60% or less today.

Many lenders are especially cautious about deals where the exit hinges on refinancing. In a rising interest rate environment, or one where cap rates continue to expand, those exits look a lot less predictable. If you’re counting on a takeout loan at an aggressive valuation, it’s time to rethink your assumptions.

Make Your Business Plan Bulletproof

In this climate, lenders are no longer just scanning your executive summary and moving forward. They’re scrutinizing every line of your business plan. To earn trust – and capital, you need to present a plan that shows you’ve thought through every phase of the project with clarity and realism.

Start by building a detailed timeline. Break it down by milestone: acquisition, design, permitting, construction phases, lease-up, and exit. Include hard cost breakdowns, soft costs, contingency reserves, and carry assumptions. Avoid generic cost ranges, bring in contractor estimates and backup data where possible.

Next, anchor your pro forma with real market rent comps. Don’t just pull numbers from the highest-end comps to justify a top-tier valuation. Include a range, show the absorption rates in comparable properties, and anticipate a slower lease-up if market conditions worsen.

Credibility matters. The more detailed and transparent your numbers are, the more confidence a lender will have in your execution.

Diversify Your Lending Options

In today’s environment, putting all your eggs in one lender’s basket is risky. Even if you receive a term sheet, don’t assume that money is locked in. Lenders are pulling back at every stage – sometimes even days before funding.

It’s smart to secure multiple term sheets early in your process. Build relationships with a variety of lenders, banks, debt funds, private lenders, and know what each is willing to offer. Keep communication open and keep at least one fallback lender warm, even after you’ve committed.

You want to be able to pivot quickly if one source dries up or moves the goalposts late in the game.

Stress-Test Your Exit Strategy

In the past, a well-timed refinance was a common, and often successful exit. But now, refinance assumptions should be tested under more conservative scenarios. What happens if interest rates rise another 50 basis points? What if valuations drop and the LTV you assumed is no longer available?

Build models that account for these variables. Can your project still succeed with a higher debt service? Will you need to bring in more equity than planned? It’s better to know now than scramble later.

Also, consider alternate exit strategies. A partial sale of the stabilized asset, a joint venture conversion, or even an extended hold might make more sense in certain cases. The key is flexibility. The more options you have, the more resilient your project becomes.

Final Thoughts

The days of easy bridge capital are gone – at least for now. But that doesn’t mean opportunity has disappeared. It just means the bar has been raised.

The developers who will thrive in this environment are those who adapt. That means presenting stronger business cases, securing multiple financing paths, and planning exits that hold up even under market stress.

If you’re serious about staying competitive and getting deals done, now is the time to tighten your strategy, broaden your network, and prepare for the unexpected. The capital is still out there, but it’s reserved for those who do the work upfront.