example is that credit unions are now allowed to engage in commercial lending with only minor restrictions. Most notable among those restrictions is that credit unions are prohibited in most cases from lending more than 80% of the value of real property. This is done to protect credit union members from excessive risk and is a common practice in the industry as a whole, although not enforced. On the other hand, credit unions are cooperatives and can therefore offer competitive advantages over other institutions in regards to rate and other terms. Most commercial lenders prefer to offer terms for shorter periods of time than residential lenders might at thirty or so years. Commercial lenders sometimes offer a five or ten-year loan with a payout based on longer, thereby leaving a balloon payment due at the loan expiration. That often requires the property owner to come up with the balloon payment himself, or to refinance or sell. Additionally a commercial lender might attempt to charge a "pre-payment penalty" in order to guarantee a certain return, in the event the loan is not kept for the full term. Frequently pre-payment penalties range between one and five years and are for an amount of interest or number of months such as frequently will be seen a "six month interest guarantee" etc. Commercial bridge loan Commercial bridge loans are sometimes referred to as short term financing, bridge financing or even hard money. Bridge loans are easy to qualify for as long as there is equity remaining in the property sufficient to cover the commercial lender's risk capital. Commercial bridge lenders will overlook property issues, incomplete permits, credit and other problems in exchange for a higher rate of return. However they will look to offset that risk by lending at a lower loan to value ratio usually of under 65% of the property's value. See also Hard money lender Mortgage loan Commercial bank References Banking in the United States