Bridge loans are a form of short-term funding intended to help your business buy assets or complete projects.
A bridge loan is a form of short-term financing that is designed to help a company meet its obligations until it secures a long-term business loan. This type of business loan is commonly used in commercial real estate and other transactions where timing is key and businesses need to secure funds quickly in order to take advantage of an opportunity.
When a business takes out a bridge loan, it uses the proceeds to purchase or improve assets, or to finance its own operations. Then, once it secures long-term financing, it uses the funds from the new long-term loan to pay off the bridge. Businesses use bridge loans (which often carry interest rates several points higher than conventional long-term financing) to fill short-term funding gaps. These include asset purchases, such as real estate, equipment, and inventory.