Bridge loan

Bridge loans help in bridging the gap between short-term cash requirements and long-term loans. Bridging loans are usually offered for between 1-18 months, with the loan repayable in full at the end of the term. Unlike other forms of borrowing the monthly interest is often rolled into the loan, meaning there are no repayments to make during the term of the loan.^[1]

The application process is usually far simpler than for other types of borrowing and applications can complete very quickly, usually in 5-14 days.

Bridge loans are largely used by businesses. A typical usage of bridge loans is seen in the Real Estate sector, when the builder secures this loan for the construction of property since he can realize the value of the property only after it is sold. This scenario holds good for any business that sells goods & services and gets payment only at the end. This loan acts as the gap financing. It can be used to purchase raw materials and other equipment to start production.

1. ↑ Treece, Kiah (2020-07-23). "Is A Bridge Loan Right For You?". Forbes Advisor. Retrieved 2022-06-19.