Bridge Loans

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Interested in Bridge Loans?

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  • Amount

  • Please enter a number greater than or equal to 25000.
  • in months

Loan Amounts

$25,000 – $5,000,000

Terms

6 – 24 Months

Rates

8.99% – 29.99%

Speed

as little as 24 hours

What is a Bridge Loan?

A bridge loan is a short-term loan designed to solve short-term cash flow problems, such as immediate financing needs, bridging cash flow gaps, unexpected circumstances that require additional or unplanned funding or new business opportunities to capitalize on. Business owners often need to find multiple ways to bring in working capital to help with cash flow shortages and bridge loans provide another possible solution, as they offer quick cash with flexible repayment options.

Many business owners utilize bridge loans, especially in situations where working capital is limited. It is important for businesses to keep a financial plan that capitalizes on many different sources of funding in order to keep a business afloat. There are countless scenarios and reasons for a business to use bridge financing. Some of those scenarios include time spent waiting for clients or customers to fill existing invoices or when purchasing new equipment. There are countless scenarios and reasons for cash flow to run dry. Many business owners find themselves in a position where they need capital fast and traditional loan options are not quick enough to be the solution. This need for a fast transaction is where bridge loans can be the answer for many businesses. The biggest benefit of bridge loans for businesses is that bridge lending allows small business owners to receive and use money quickly, with different options available to pay the funds back later.

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What can a bridge loan be used for?

Bridge loans are designed to help business owners fill gaps in their cash flow needs. Often, a business will utilize a bridge loan when waiting for more permanent financing products to come to fruition, or if an opportunity or urgent situation comes up where additional funds are needed immediately and there is no time to wait for revenue to catch up to expense needs. The flexible requirements for bridge loans allow businesses to take advantage of bridge lending for many different functions. The following are some of the most common uses that business owners utilize bridge loans for:

Taking advantage of equipment or inventory discounts

It is not uncommon for business owners to encounter a situation in which a big sale or offer for inventory or equipment comes up, but limited working capital makes capitalizing on the opportunity impossible. If there was a way to obtain additional money fast, it would allow a business to take advantage of more growth opportunities or take advantage of reduced pricing. Unfortunately, in a lot of cases, most business owners don’t have a lot of extra capital on hand. Bridge loans are one way that business owners fill cash flow gaps and take advantage of these types of opportunities that they otherwise would not be able to afford.

Seasonality

Some industries live and die through up and down seasons, which makes it hard for these types of businesses to get through the slower seasons. From inventory to payroll, or any other immediate cash flow needs, a bridge loan might be the solution to help make it through until the next busy season. Bridge loans are one financing option used frequently to cope with seasonality.

Gap financing while permanent financing is being worked on

One of the most common reasons that business owners apply for bridge loans is that while there’s are longer-term, more permanent financing option in the works, there’s an immediate cash need. Maybe there is an investment funding on the way or there are applications waiting for approval, some business owners find themselves in situations where they need working capital immediately and they can’t wait for the pending funds to come in. Bridge loans are one solution, filling the gaps in cash flow until the other financing products work out, and then those funds can be used to cover the repayment for the bridge loan once they arrive.

Business growth and expansion

Another common use of bridge loans is for growth and expansion. Maybe the office next door closed, or the perfect spot for an additional location just opened up. Working capital shortages shouldn’t have to limit a business’ ability to take advantage of growth opportunities – business owners can work with lenders and apply for a bridge loan to get the cash their business needs fast.

Hiring new employees

Bridge lending is also beneficial for businesses that need to hire new employees. Adding on additional employees to payroll adds up, and it takes some time to adjust to the higher bi-weekly or monthly expenses. For businesses that might hire new employees and then run into working capital shortages, a bridge loan might be the right financing option.

These are just some of the many uses that business owners commonly use to bridge loans for. Generally, when a business owner applies for a business bridge loan, there are several other financing lines being used in association with the bridge loan financing. For example, because the application and qualification process is often quicker for a bridge loan than for other traditional loan options, some business owners apply for and receive funds from bridge loans while awaiting funds from other loan products. When businesses are expecting additional, permanent financing but require immediate cash flow assistance, a bridge loan can provide a viable solution.

What are the benefits of a bridge loan?

Because they are designed to help business owners with immediate, short-term cash flow needs, bridge loans are a great option for business owners to consider, and they offer many benefits. Rather than using personal money, or being forced to pass on opportunities that would result in additional profit, business owners can apply for a bridge loan and the funds can often be wired within 24 hours of applying. One benefit of bridge lending for business owners is that lenders usually do not need quite as much information during the application and qualification process compared to traditional lending options with longer terms. Similarly, businesses do not need to demonstrate as high of credit strength to qualify for bridge lending compared to other types of loan products.

Business bridge loans provide flexibility for business owners. Some of the benefits of bridge loans for business owners are: bridge loans provide available capital at your fingertips; the application process is quick and easy; there are no application or upfront fees; there is limited documentation required; most lenders can finish underwriting and close your bridge loan within 24-48 hours; most lenders offer flexible repayment terms.

Available capital at your fingertips

One of the biggest benefits of bridge lending for business owners is that it gives them the capital that they need when they need it, quickly. Most traditional lending options take lots of time and the terms of repayment can go on for what can seem like forever while the business makes the payments. With bridge loans, businesses get the money sooner than with other lending options, and the entire process – from finding a lender, applying for the bridge loan, to receiving the funds – is often very fast, and nowadays, most of it can be done online. Bridge lending provides a solution for business owners who need emergency funds fast.

Quick and easy application process

Another benefit of bridge lending is that the application process is quick and easy, especially compared to traditional loans. Most lenders can even complete the entire process online. With all of the different financial websites out there, finding information about different lenders that offer bridge loans has never been easier. With a quick search on the Internet, business owners should be able to find answers to all of their questions about bridge lending and browse options of different lenders and different types of bridge loan product options available.

No application or upfront fees

Another benefit to bridge lending for business owners is that most lenders do not charge application fees or other types of up-front fees for bridge lending. When researching about different lending options, business owners should make sure to find a lender that has their business’ best interest in mind and make sure to ask questions to find out about all of the fees associated with the loan product.

Limited documentation required

One additional benefit that many business owners appreciate with bridge lending is that there is usually much less documentation required compared to when applying for traditional loan products. With bridge lending, because the terms of the loan are much shorter than with traditional loans, applying businesses will only need to provide bank statements and personal credit statements to demonstrate to the lender that their business will be able to pay them back and that their business will stay open for the terms of the loan.

Underwriting and closing within 24-48 hours

A huge benefit for business owners that applies for bridge loans is that the underwriting and closing process for bridge lending is usually done in as little as 24 to 48 hours. Many business owners utilize bridge lending because they need money quickly, and there are not many loan options that can get cash into business owners’ hands as fast as bridge lending. Most lenders understand that when business owners are considering bridge lending, there is a high sense of urgency to receive funds quickly, however, this does usually come with increased rates.

Flexible repayment terms

Although interest rates are typically higher for bridge loans compared to traditional loans, because the terms are much shorter, most lenders offer flexible repayment terms. It is important for business owners to find a lender that fits with their work and communication styles so that they can have open communication and discuss term and repayment options that work best for their business finance plans.

What are the best industries for Bridge Loans?

Because bridge lending provides flexibility to business owners to obtain funds quickly to fill cash flow needs, bridge loans are a financing product that is used by all industries. Bridge loans allow business owners to utilize cash immediately, often when there is future funding on the way, and many different types of businesses apply for these types of loans. From construction companies, medical offices, manufacturers, or transportation companies, business bridge loans are a popular financing solution for many business owners because they all have one thing in common – they often find themselves in situations where they need cash fast.

Regardless of the industry that a business works in, it is important to consider cash flow before applying for a bridge loan. Bridge loans are intended to be short in duration, as they are just bridging a gap. For business owners considering a bridge loan for their working capital needs, the most important thing to consider is to make sure that their cash flow can support the payments for the terms throughout the duration of the bridge loan – if a business ends up in a situation where they can’t make their payments, it will hurt their credit and could ruin the business. Business owners should make sure to find a lender that they can discuss their financial situation extensively to help determine if bridge lending is right for their business.

How does the Bridge Loan process work?

One of the first things that business owners need to ask when researching information about bridge loans is how do bridge loans work. Luckily, with the amount of information available on the Internet, it is easy to find out what type of bridge loan options are available and how to find business bridge loan lenders that are right for any business. Some online resources even provide a bridge loan calculator and other tools to learn about bridge loans for business owners. Basically, a bridge loan is not very different than most traditional loan options, other than that the terms of the loan are usually shorter. Bridge loans are designed to help business owners bridge gaps in working capital for short periods of time – usually to fill in cash to take advantage of growth opportunities or to help in cash flow shortage situations, especially for seasonal businesses. Some lenders will require collateral to secure the funds for a bridge loan, other lenders will take liens on other assets that the borrowing business can put up to secure the funds – it is important for business owners to find a lender that they can work with to negotiate terms that work best for their business.

Because bridge loans are based on cash flow, and the terms are shorter than with other lending options, the qualification and application process is not as long and tedious as with some of the other lending products available for business owners. The process to secure a bridge loan is simpler than other types of financing, lenders will just need to look at some bank statements and check the personal credit of the business owner to get an idea about if the business will be able to pay back the borrowed funds. Additionally, a business’ credit doesn’t need to be as good as the high credit score needed to qualify for other types of lending – the lender will just need evidence that the borrowing business will still be around and able to pay back funds for the duration of the terms of the loan. Typically, with a paperless, one-page application and limited documentation necessary, funds could be available in as quickly as 24 hours. Once the loan is secured, payments will be taken on a daily, weekly, or monthly basis until the loan is paid off in full.

One thing to note about bridge loans is that because there are shorter terms, and the urgency to get the funds is higher than with other loan options, the interest rates tend to be higher than with other funding options. A smart small business owner will do some research about multiple funding options to create a financing plan that works optimally for their situation. Bridge loans are one option to help fill gaps by taking advantage of a quicker underwriting process for short-term loans that can help immediate cash flow needs.

Bridge Loan Case Study

One of our clients owns a dental practice, and recently expanded into the office next door to theirs. The landlord was paying for a small percentage of the buildout, but there was a need for additional capital for both dental equipment and working capital for our client to hire a new dental hygienist. By utilizing an equipment financing program, we were able to help our client purchase a new dental chair from Tiger Medical and worked out a bridge loan for working capital to build and develop the remainder of the space and hire their new dental hygienist. In this case, a bridge loan was the best use of financing for working capital for our client because really there was only a gap of 6 months that our client needed to bridge between before the revenue from the new equipment would stabilize to pay for the new dental hygienist on staff.

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