If your company has a pressing financial need, but can’t wait around for a month or two in order to get a traditional bank loan approved, the answer just might be a business bridge loan. A business bridge loan does not really consist of any specific kind of loan but is instead a reflection of how the money is used from that loan. A number of small business owners make use of bridge loans in order to manage their financial requirements.
For instance, some bridge loans are used to manage obligations involved with commercial real estate. A good example of this is when a balloon payment is due, or a hard money loan is reaching maturity. It will be necessary to acquire funding to cover those costs in the short term until more permanent financing can be made available. In other cases, bridge loans are used simply to fill in gaps where working capital is needed while waiting for other sources of income such as customer payments.
What makes bridge loans unique?
The big difference between bridge loans and other kinds of loans is that they are only temporary, and are only intended to have short-term duration. By definition, bridge loans are only a temporary kind of funding and are usually repaid in less than 12 months. Of course, that means they generally carry higher interest rates than other kinds of financing do, simply because they pose a greater risk to the lenders.
In general, it can be said that bridge loans will also have higher interest rates, higher fees, and a larger overall cost of financing associated with them, as opposed to more conventional forms of funding. The good thing is they take far less paperwork, and less stringent credit requirements are necessary for approval.
Bridge loans and Norus Capital
At Norus Capital, we work with a great many clients who are interested in bridge loans, and if you’re thinking about obtaining a bridge loan, we’d like to hear from you too. Contact us today, so our financial specialists can discuss some options with you.