Bridge Loans

This type of business financing is very aptly described by its name, Bridge loans or Bridging loans.  This type loan is not a permanent or even long term loan. It is exactly as stated, a bridge between now and when the long term financing is in place.

Many times this type of financing is associated with real estate purchases, (office buildings, homes, raw land): the types of assets that a money lender can use without regard to the type of business that you have.

A bridge loan Is considered to be somewhat riskier than either long term financing or Purchase Order loans so be aware that the interest rate may be higher than you would normally expect.

Bridge Loan Sources

Sources for bridge loans come from many different places. There are many commercial sources for this type of loan. Do not overlook people in your industry who may be willing to help on a short term basis. They can make a nice profit on their money and you may find a new ally within your business community.

Short Term Loans

You do need to be aware that the contracts for bridge loans that are typically used for short term loans are very tight and heavily weighted in the lender’s favor. They are sometimes called hard money loans. If you are in need of such a loan, bridge loans are great and often necessary. Remember, you will be under a contract where the default penalty will be painful; so be sure that the benefit significantly outweighs the risk of failure to repay the loan in a timely basis.