What are bridge loans?
Bridge loans are exactly what they sounds like – a short-term loan to “bridge” the gap while securing long-term financing, or investing in property. A bridge loan is a type of commercial loan that is perfect for small businesses looking for funding to provide working capital while waiting for long-term funding. Small businesses go through many changes in their lifespan; when applying for long-term funding, such as equity financing, or perhaps looking to invest in real estate, a business may need short-term capital. Bridge loans typically have a much faster approval and funding process than a traditional loan, and are offered at short terms usually no longer than one year.
How do businesses use bridge loans?
There are 2 common uses for a bridge loan: To “bridge” the wait time for long-term funding, and to invest in property.
Traditional and alternative lenders alike each have different processing times, depending on the size of the funding. While long-term funding for developments in your business – such as renovating, upgrading, etc. – are a prudent investment in your business’s future. While waiting on the funding, you may not want to draw on your working capital. This is where a bridge loan comes in. This short-term loan gives you the freedom to keep your business running smoothly while you wait for your long-term funding.
Or perhaps you are looking to move or expand your business. Often, companies will invest in new property to give their business room to grow. A bridge loan is a great way to secure the funds you need to get that new location before you’ve sold your current one. This type of funding gives you the freedom to be flexible and grow your business with ease.
Why choose a bridge loan?
Gain access to capital faster with a shorter application, approval and funding process than a traditional loan. Bridge loans are offered at shorter terms, but with higher interest rates. However, most companies don’t hold their bridge loan for long and can pay them off quickly when your low-interest funding comes in. These loans are designed to be a temporary “bridge” between financing.
Use your bridge loan for a number of small business needs:
- Tax lien pay off
- Expansion and hiring
- Seasonal business
- Replenish business capital depleted by the traditional loan process
- Interim cash to assist with business management
- Property investment
See if a bridge loan from SGE Financial is the perfect fit for your small business.