Bank vs debt-fund bridge loan pricing: what is the difference?

When does bank bridge fit?

Sponsors with strong banking relationships, willing to provide recourse, and operating at moderate leverage. The 100 to 200 basis point savings vs. a debt fund pays for the recourse exposure if the deal goes well. Bank bridge is also typically more flexible on prepayment, with lighter exit costs.

When does debt fund fit?

Higher leverage, non-recourse requirement, transitional or value-add business plans where bank credit committees would balk. Debt funds also move faster on diligence and are more comfortable with complex stacks (mezz, partial completion) than most banks. The premium reflects all of these structural advantages.