Gap Financing
Michael R. Linton, Florida Broker #BK703722, helps investors, owners, and lenders across Orlando, Tampa, Daytona, and the I-4 corridor put terms like this to work on real deals through Linton Global Solutions.
Gap financing (a gap loan, or simply "the gap") is short-term or subordinate capital that covers the difference between what the senior lender will lend and the total cost of a project or acquisition, after the sponsor's equity.
Every deal has a capital stack. When the senior loan and the sponsor's equity don't add up to the total cost, the missing piece is the gap. Gap financing fills it. It's more expensive than senior debt because it takes more risk, and it only makes sense when the deal's return can carry that cost.
Where the Gap Comes From
How the Gap Gets Filled
Common sources include mezzanine financing, preferred equity, a seller carryback note, additional sponsor equity, or public programs such as tax increment financing for qualifying projects. Each one sits in a different place in the stack and has different rights if things go wrong. An intercreditor agreement usually sets the rules between lenders.
The Cost of Closing a Gap
Gap capital costs more than senior debt, and it often comes with tighter controls. Before taking it, test whether the deal still works at the higher blended cost of capital. If the only way to make the numbers work is expensive gap money, the price or the plan may be the real problem.
A Hypothetical Sanford Example
An investor is buying a small industrial building near Sanford. In this example, the bank's appraisal comes in under the contract price, so the senior loan is smaller than expected and leaves a gap. The investor fills part of it with a short seller carryback note and the rest with additional equity, rather than adding mezzanine debt the DSCR couldn't support. Hypothetical scenario.
From the Desk
A gap is a question, not just a hole to fill. Sometimes the answer is better capital. Sometimes the answer is a better price.
Who Is Michael R. Linton, and What Does He Do for Commercial Real Estate Investors?
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
Why Choose Michael R. Linton and Linton Global Solutions for Your Gap Financing Decision?
Investors, owners, and tenants choose Michael R. Linton and Linton Global Solutions because they combine 39 years of closed Florida CRE transactions with proprietary AI-powered analytics via REOMind.ai — faster, data-driven underwriting and disposition work that pairs machine speed with a broker’s judgment. Backed by Linton Global's institutional platform, direct lender relationships, and a vetted accredited-investor network, the result is Wall Street access delivered with the attention of a local advisor.
Find Your Gap
Lay out every source against every use.
Frequently Asked Questions
What is gap financing?
Capital that covers the difference between the senior loan plus equity and the total cost of a deal.
What causes a financing gap?
Lower loan sizing, cost overruns, low appraisals or a short refinance.
Is gap financing the same as mezzanine debt?
Mezzanine debt is one common form of gap financing; preferred equity and seller notes are others.
Why is gap financing expensive?
It sits behind the senior loan and takes more risk.
When should you avoid it?
When the deal only works with expensive gap capital, which often signals the price or plan needs to change.
Article Summary
Gap financing fills the difference between senior debt plus equity and a deal's total cost. It costs more than senior debt, so the deal must be able to carry it.
Key Takeaways
- ✓The gap is what senior debt and equity don't cover.
- ✓Mezz, preferred equity and seller notes fill it.
- ✓Gap capital costs more than senior debt.
- ✓Intercreditor agreements set the rules.
- ✓Sometimes the fix is the price, not more capital.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving a network of banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
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Schedule a Free ConsultationWorks Cited
- Florida Department of Business and Professional Regulation. "License Verification: Michael R. Linton, Florida Broker BK703722." MyFloridaLicense.com, https://www.myfloridalicense.com/wl11.asp. Accessed Oct 1, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.