A take-out loan is a type of permanent or long-term loan arranged to pay off an existing short-term loan (commonly called a “bridge loan” or “construction loan”) once a project is completed or certain conditions are met. The take-out lender agrees in advance to step in and provide funds to retire the interim debt, thereby securing long-term financing.
In real estate, for example, developers may build a property using a construction loan. Once the property is built and leased (or meets occupancy criteria), the take-out loan replaces the construction financing with more favorable terms.
