Why a lease security deposit may need bridge financing
Commercial leases often require a security deposit of one to several months of rent, held by the landlord until the lease ends. For a business opening a new location, that cash can be needed at the same time as build-out and inventory costs, so some tenants cover it with a short-term bridge loan until funds free up.
The deposit comes from the rent: $5,000 a month and a three-month deposit is $15,000. This calculator works that out, then prices a bridge loan for that amount using the same bridge-loan maths as the main swing loan page.
Interest, points and how the loan is repaid
US bridge loans are usually quoted as an annual rate, so the calculator divides it by 12 for the monthly interest. You can pay interest monthly, or let it roll up and compound until payoff. Origination points are a percentage of the loan; if they are added to the loan you pay interest on them too.
Worked example: a three-month deposit on $5,000 rent
A lease with $5,000 monthly rent asks for a three-month security deposit, which is $15,000. You borrow it for 12 months at 11% a year with interest paid monthly, so the monthly payment is $137.50. Two points paid separately cost $300.
Interest over the year is $1,650.00 and fees, including $500 of closing costs, are $800.00, so the total cost of borrowing the deposit is $2,450.00, or 16.3% of the deposit. You repay the $15,000 balance at the end.
Alternatives and limits
A letter of credit, a lease guaranty or a smaller deposit may cost less than borrowing, so ask your landlord what they will accept. This calculator assumes the deposit is returned in full and does not include any interest the landlord pays on it. Lease terms, state rules on deposits and lender requirements vary.
To compare interest methods on a bridge loan, use the US swing loan calculator .
For monthly interest-only payments, use the US interest only bridge loan calculator .
Use the right country page
This page stays in US dollars and uses US terms: monthly base rent, a security deposit and an annual rate with points. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK rent deposit bridging loan calculator, which uses annual rent and a monthly bridging rate. The inputs reset and amounts are not converted.
Inputs for the security deposit bridge loan calculator
Base rent
The rent in your lease, before taxes and operating charges. Switch the period if you know the annual figure.
Rent quoted per
Month if the rent figure is monthly, Year if it is annual.
Security deposit
How many months of rent the landlord asks you to lodge.
Quoted interest rate
The note rate, not the APR. US bridge loans are usually quoted per year.
Rate quoted per
Year (nominal) divides by 12. Choose Month for a monthly rate.
Time the deposit is tied up
Whole months until the deposit is returned or you repay the loan.
How interest is paid
Paid monthly, or rolled up and repaid at the end, retained up front or deferred.
Origination fee (points)
A percentage of the deposit. Choose below whether it is paid separately or added to the loan.
Exit fee
A percentage payable at payoff. Most bridge loans have none.
Other quoted costs
Closing costs or legal fees paid at the start.
CALCULATOR QUESTIONS
US security deposit bridge loan calculator questions
How much is a commercial lease security deposit?
It is set in the lease, often one to three months of rent. At $5,000 a month, three months is $15,000.
Can you borrow a security deposit?
Some short-term lenders will, usually against other collateral. Terms vary, so use the rate and points from a real quote.
Do I get the deposit back?
Normally yes, at the end of the lease after any deductions. The calculator assumes it comes back in full.
Is it cheaper to pay interest monthly?
Yes when the alternative is compound rolled-up interest, because you avoid interest on interest. You need cash to pay it each month.
What happens when I change country?
The United Kingdom option opens the separate UK rent deposit bridging loan page, in pounds, with annual rent and a monthly rate. Your inputs are reset rather than converted.