Mini-Perm Loans 101

Terrydale Capital

Sep 28, 2023 5 Min read



In the realm of commercial real estate financing, mini-perm loans have gained prominence as a flexible and practical financial tool. These loans bridge the gap between short-term financing and long-term mortgage solutions, offering borrowers an advantageous option for project completion and stabilization. In this blog, we will delve into the intricacies of mini-perm loans, exploring their definition, purpose, advantages, and their role in commercial real estate.

Understanding Mini-Perm Loans: 

Mini-perm loans are a form of intermediate financing that provides developers and investors with capital to complete a commercial real estate project, stabilize operations, and secure long-term permanent financing. They typically have a term ranging from two to five years, allowing borrowers to obtain essential funds while establishing the project's viability before transitioning to long-term financing options.

Purpose and Application: 

Mini-perm loans serve various purposes in commercial real estate projects. They are commonly used to:

  1. Fund construction: Developers can secure funds for construction, renovation, or expansion projects, including acquiring land, erecting buildings, and implementing essential infrastructure.
  2. Bridge lease-up periods: For income-generating properties, mini-perm loans can cover the period required to lease out vacant space, stabilize cash flow, and demonstrate the project's profitability.
  3. Enhance property value: Borrowers can utilize mini-perm loans to implement value-add strategies, such as property upgrades or repositioning, which can potentially increase the property's market value.

Features and Benefits:

  1. Flexibility: Mini-perm loans offer borrowers flexibility in managing their commercial real estate projects. The shorter term provides a window for project evaluation, allowing necessary adjustments to be made before securing long-term financing.
  2. Interest-only payments: During the mini-perm loan term, borrowers often make interest-only payments. This reduces the immediate financial burden and allows them to focus on stabilizing operations or executing value-add strategies.
  3. Reduced refinancing risk: By providing sufficient time to stabilize the property, mini-perm loans mitigate refinancing risks and increase the likelihood of securing favorable long-term financing terms.
  4. Lower interest rates: Mini-perm loans typically have lower interest rates compared to short-term bridge loans, making them a cost-effective option for borrowers.
  5. Exit strategies: Borrowers can utilize mini-perm loans to prepare their properties for sale or refinance them with long-term loans once stabilized. This enables them to maximize their return on investment.

Considerations and Eligibility: 

While mini-perm loans offer several advantages, borrowers should consider the following:

  1. Loan-to-value (LTV) ratio: Lenders often require a lower LTV ratio compared to long-term financing, typically ranging from 60% to 75%.
  2. Financial strength: Lenders assess borrowers' financial stability, creditworthiness, and experience in commercial real estate development before approving mini-perm loans.
  3. Exit strategy viability: Borrowers must present a feasible plan to transition to long-term financing or exit the investment once the mini-perm loan term concludes.


Mini-perm loans play a crucial role in commercial real estate financing by providing developers and investors with a flexible financing option to complete projects, stabilize operations, and secure long-term financing. Their unique features, including flexibility, lower interest rates, and reduced refinancing risks, make them an attractive choice for borrowers. However, it is essential for borrowers to carefully consider eligibility criteria and formulate viable exit strategies to maximize the benefits of mini-perm loans in commercial real estate ventures. When you need a partner that can connect you to the right lenders and get you the most competitive financing terms, contact Terrydale Capital today!

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