Bridge financing “bridges” the gap between the time when a company’s money is set to run out and when it can expect to receive an infusion of funds later on. This type of financing is most normally used to fulfill a company’s short-term working capital needs.
There are multiple ways that bridge financing can be arranged. Which option a firm or entity uses will depend on the options available to them. A company in a relatively solid position that needs a bit of short-term help may have more options than a company facing greater distress. Bridge financing options include debt, equity, and IPO bridge financing.
Bridge financing provides swift access to funds for urgent financial needs.
Facilitates smooth financial transitions, preventing delays in projects or investments.
Funding can be used for various purposes, offering versatility to borrowers.
Offers flexibility in repayment, aligning with borrowers' financial situations.
Financing is typically secured by valuable assets, potentially resulting in more favorable terms.
Bridge funding empower borrowers to seize time-sensitive opportunities, capitalizing on favorable market conditions or investments.
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Bridge funding, also known as a bridge loan or bridge financing, is a short-term loan used to bridge the gap between immediate financial needs and a future source of funding, often used in real estate transactions or for business purposes.
Repayment terms for bridge loans are typically shorter than traditional loans, often ranging from a few months to a few years, and can vary depending on the lender and the borrower’s specific circumstances.
Bridge funding is appropriate when there’s a need for quick access to capital to seize time-sensitive opportunities, such as purchasing a new property before selling an existing one or covering expenses during a transitional period in a business.
Bridge loans are often secured by valuable assets, like real estate or equipment, serving as collateral. If the borrower fails to repay the loan, the lender may have the right to take ownership of the collateral asset. The specifics of collateral and terms may vary by lender.
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