Bridge loans are a financing tool many borrowers have turned to. Essentially, a bridge loan fills in the funding gap that arises in situations like when you’ve sold a home but are waiting for the proceeds to flow in. They are quite useful whenever an individual or business needs to cover a cash-flow gap, as shown by this article’s look at their advantages.
Bridge Loans Have Faster Applications
Compared to traditional loan applications, such as those for mortgages, bridge loan applications are generally faster. That makes them a good fit for when a business or individual needs to make a time-sensitive purchase.
Shorter Terms
Bridge loans are generally shorter than most other loans businesses and individuals encounter. You can usually expect a loan repayment length of six to 12 months. Conventional loans often drag out for many years, so bridge loans can be a good way to get cash in quickly, then promptly move on from the debt. (This condensed timeframe may come with higher interest rates and different payment obligations than a borrower is used to, so as always, carefully consider any loan’s parameters before entering an agreement.)
Protecting Opportunities
A bridge loan can help borrowers make sure opportunities don’t slip away. For instance, if a business is short on cash because they’re waiting for clients to pay, but a great deal on inventory presents itself, the business could use a bridge loan to seal the deal on the inventory. As clients pay up, the business would pay off the bridge loan. An individual, meanwhile, may use a bridge loan to make sure a real estate opportunity doesn’t fall through.
Convenience
Bridge loans can lead to more convenient transitions for individuals and businesses. On the individual level, if you need to move rapidly for a job, a bridge loan can let you secure a home in your new city quickly. Businesses, meanwhile, gain access to funding rapidly while avoiding long-term debt obligations.
Considering bridge loans or another type of funding solution? At Speed Funding, we’d love to discuss your options, so please reach out today.