Tax equity bridge loans: A definitive guide

Tax equity bridge loans (TEBLs) are one of the most important financing tools available to clean energy project developers. They let projects fund construction before a tax equity investor's capital contribution arrives — and they sit inside a bridge lending market that, according to Crux's 2025 Market Intelligence Report, grew 8.9% year over year in 2025, outpacing construction lending and debt financing.

This guide focuses specifically on tax equity bridge loans (TEBLs): their structure, cost, capital providers, and how the One Big Beautiful Bill (OBBB) has changed the landscape. 

Key takeaways

• A TEBL is a short-term, project-level loan that funds construction before a tax equity investor's capital contribution arrives at or near the placed-in-service date.
• A TEBL is repaid by the tax equity investor's commitment, so lender underwriting focuses on whether that investor will fund — not on the broader tax credit transfer market.
• Committed TEBLs — where a tax equity investor is bound by an executed contribution agreement — typically price from 150–225 basis points above the secured overnight financing rate (SOFR) with advance rates up to 98% of the investor's commitment.

What is a tax equity bridge loan? 

A TEBL is a short-term, project-level loan that funds construction costs before a tax equity investor's capital contribution. It is repaid when a tax equity investor funds at construction completion milestones. 

How does a tax equity bridge loan work?

Tax equity investors generally do not fund until a project reaches mechanical or substantial completion milestones, qualifies for the investment tax credit (ITC) or production tax credit (PTC), and meets the other conditions in the equity capital contribution agreement. Developers, however, need cash much earlier to pay contractors, equipment suppliers, and grid interconnection costs as construction progresses. A TEBL fills that gap by providing funds up front, during construction at or post-NTP.

How do tax equity bridge loans differ from tax credit bridge loans?

TEBLs are historically common and used when a project raises traditional tax equity. The loan is repaid by the tax equity investor's capital contribution, and the lender's underwriting focuses on whether that investor will fund as committed.

Tax credit bridge loans emerged with the introduction of tax credit transferability. They're used when a project monetizes its tax credits through transferability rather than tax equity. The loan is repaid from the cash proceeds of a tax credit sale, and the lender's underwriting focuses on the buyer, the sale price, and the project's tax credit qualification.