Soft-Mini Perm

A "soft" mini perm loan, much like a hard mini perm loan, is a form of short-term financing used in the commercial real estate industry. The primary difference between a hard mini perm and a soft mini perm typically relates to the terms and conditions of the loan.

A soft mini perm loan generally provides more flexibility to the borrower than a hard mini perm. While the ultimate aim of a soft mini perm loan is still to allow the borrower time to stabilize a property and eventually secure permanent financing, a soft mini perm does not enforce this via strict covenants.

Specifically, a soft mini perm does not mandate that the borrower must refinance the loan once the property reaches stabilization. Instead, it generally allows the borrower to continue the loan for the full term if they choose to do so. This can provide a safety net for borrowers if, for example, they are unable to secure long-term financing immediately after stabilization.

While a soft mini perm loan might have a slightly higher interest rate or other costs compared to a hard mini perm, the additional flexibility often makes this a worthwhile trade-off for borrowers.