Bridge loans offer businesses with interim financing between securing permanent funding options. They are a form of a short-term funding tool used to bridge the financial gap, so to speak, between two events. The kinds of events most often thought of when assessing whether a bridge loan is the correct option might be right before an initial public offering or between rounds of funding. Additionally, bridge loans are perfect as a source of income while negotiating acquisitions or expansions or to cover expenses during a seasonal downturn in activity before the busy season starts again.
Often, bridge loans are used to quickly close on a property sale in commercial real estate purchases. The loan is typically paid back once the property in question is acquired and flipped or becomes profitable in another manner. Developers might use bridge loans to carry expenses while waiting for permits.
Bridge Financing comes in a variety of options. Debt bridge financing offers short-term, high interest loans for those who need cash quickly but only for a very limited time. Equity bridge financing works best for those unwilling to incur high interest debt, as instead of cash repayment, the lender is repaid with firm equity ownership. Initial Public Offering financing is used in investment banking to cover expenses associated with an IPO, to be repaid once the IPO is successful.
With so many kinds of bridge loan options, it is imperative that you have a financial expert on your side to explain the difference and help analyze the best option for your business. Contact Coral Capital Group to learn more about bridge loans and our many other funding options today.