A Quick, Affordable, and Convenient Bridge Loan
Explore great short-term financial opportunities to fill gaps within your business operations. A bridge loan offers businesses a short-term capital injection while applicants wait on securing permanent financing solutions. A bridge loan is a quick, effective solution to meet business and financial obligations.
These types of loans go by many other names such as:
- Gap financing
- Swing financing
- Hard money loans
- Interim financing
The names might be different, but the concept and outcome are the same.
Bridge loans are a popular alternative to traditional business lending and other funding options.
Bridge loans are perfect for those businesses seeing dips in operational income such as the result of seasonal demand. The loans are ideal for covering short-term needs like bringing on new talent, acquiring supplies, moving locations, and much, much more.
Working with a trustworthy, reliable bridge loan lender is essential to ensure the loan, its terms, and opportunities are found so that it meets your business’s needs and goals.
The following information outlines everything needed to explore bridge loan financing for your business, through the options presented by Your FundingTree.
How Does a Bridge Loan Work?
One never truly knows the demands and opportunities faced when running a business.
A business may explore bridge loans to capitalize on unbeatable opportunities:
- A sudden need to move locations
- A massive supplier buyout that could majorly cut costs
- Adding finishing touches before being acquired
- Refinancing commercial property for better terms
These are all legitimate reasons to take out a bridge loan. Yet, and more often than not, the bridge loan goes toward some form of realty opportunity.
Gap financing is as the name implies: it fills a financial gap.
The Application Process
A business exploring these financial options will put up collateral when applying. The collateral is typically the commercial property the business owns or other types of assets.
The business is underwritten and receives bridge loan proposals if they meet the requirements.
Upon approval, applicants often receive their funding within a few business days. In some cases, after the bridge loan is processed, the money could be available the following day!
The Bridge Loan Agreement
It is on the borrower to fulfill the obligations of the loan agreement:
- Repayment length of 6 – 12 months or up to several years
- Some bridge loans offer a prepayment incentive (or penalty)
- Several fees such as origination fee, appraisal, escrow, and others
- Variable interest rates that may fall around 10% (or higher)
A bridge loan is typically capped around 70%-80% of the property’s value. The remaining amount is paid by the borrower and/or business investors.
The Finer Details
Bridge loans are not a long-term solution.
Those seeking them should treat them as the short-term solution they offer while seeking long-term forms of working capital and business funding. That said, bridge loans are a great option if you are responsible and smart with how they are used to capitalize on short-term opportunities.
Bridge Loans vs Traditional Loans
A bridge loan offers a faster way to receive funding when compared to traditional loans.
The approval and funding processes both take less time than they do for traditional loans.
The convenience of this means these loans tend to have relatively short terms, as well as high interest rates and expensive origination fees.
In most cases, borrowers will accept these terms because they still require fast, convenient access to funds, and they intend to pay the loan off quickly. The high-interest rates are necessary because the lender knows that their loan is short-term and borrowers plan to pay it off with lower-interest, longer-term financing very quickly.
Most bridge loans will have no repayment penalties.
Advantages and Disadvantages of Bridge Lending
We understand that you may have questions regarding bridge lending – like:
- Why consider bridge loans versus traditional bank loans and other funding options?
- Is it worth using your business’s assets or its property as collateral?
- Do the short-term opportunities warrant taking on a loan if you have already been rejected before?
Bridge loans are quick to process meaning your business could have the money within a few days after approval. Given the timing, you could capitalize greatly on a business opportunity.
Windfall moments could be all that is needed to elevate your business to greater success.
Advantages of a bridge loan:
- A huge supplier or manufacturer sales event that cuts the costs of your goods and expands the profit margins of your sales.
- Discovering a new location that is both ideal for business operations and finances, offering better opportunities to spur sales while having a better mortgage rate.
- Doing a quick boost in operations or ‘float’ while interested parties explore acquiring the business, raising its value or at least taking some stress off the process.
- Denying a competitor from entering your space by buying out property they would go after, thus placing them too close for comfort.
The opportunities presented once one has bridge loan financing is astounding. Your decision to explore one could be the single biggest influencer of your business’s success.
Of course, there are downsides to taking on a bridge loan.
The disadvantages are heavily reliant on the business owner but could also result from unforeseen consequences of the market or one-off events.
Disadvantages of a bridge loan:
- Using your commercial property as collateral which could turn south due to any number of unexpected events with your personal health, the markets, and operations.
- Taking on additional payments that could stress the business budget and ultimately hold back other long-term goals since money is wrapped up in bridge loan repayments.
- Potentially high fees and penalties with almost no flexibility from lenders or penalties for being proactive and paying too early (prepayment penalties).
- Having investments and opportunities fall through after the fact, leaving the business with a bridge loan incurring interest and possibly fees while going unused.
All-in-all, businesses expecting a large capital investment can use bridge loans to provide all the capital needed when waiting for finances to come through.
By design, bridge loans are intended to be short-term financing solutions that can be acquired quickly at a higher cost than conventional loans. It is important you fully understand how bridge loans work, their pros and cons. You should also know what to expect when applying for and receiving a bridge loan to ensure the success of your business decisions.
Why Use Your FundingTree for a Bridge Loan
At Your FundingTree, we serve many types of businesses: manufacturing, staffing, transportation, security, retail, and many more.
Your FundingTree is here to help any business large or small.
Our knowledgeable staff are ready to help, so please let our team become your business partner and help support you and your business to even greater heights of success.
Why partner with us? Consider these benefits:
- Quick, easy, and free application
- Same day funding options available upon approval by a bridge lender
- Access to our team of financial advisors
- Up to five bridge lenders competing for your business
How to Apply for a Bridge Loan
The following is a simplified overview of the typical bridge loan application process.
Here are the simple steps when using Your FundingTree:
- Submit your company details to Your FundingTree, then you can speak with one of our financial advisors, so we are aware of your goals.
- We work through every opportunity within our marketplace to find the best bridge lending options tailored to your business’s needs.
- We will introduce you to the potential bridge loan companies.
- Upon approval after being underwritten, you will receive funding and begin a working relationship as a borrower to your new bridge lender.
The process is rather simple and quite smooth once you begin working with a great bridge lender. Your FundingTree makes that a reality.
Financing Success with a Bridge Loan
Success with a bridge loan is when you are approved for one, use it for smart purchases, and exit the loan before it becomes a burden. The following offers some guidance if you choose to explore this type of financing option.
Leverage the Loan for Other Funding
A short-term bridge loan and the resulting investment could prove positive to credit scores. This, in turn, could open new opportunities for other forms of business funding.
We Find the Best Loan Proposals for Your Business
A short-term bridge loan often goes toward commercial property.
It is vital that everyone is in place to make this process go as smoothly as possible. Property sales, as you know, can become convoluted and troublesome if issues pop up. This also goes for rehabilitating a property or capitalizing on timely opportunities.
From bridge lending to the real estate broker, you will want to lock in everyone and everything before giving the go-ahead on financing.
Know Your Exit Strategy
Losing your commercial property or other assets because you were irresponsible or could not keep up with its repayment is a long-term problem!
It is in your best interest to have an exit strategy when entering into a loan agreement.
Understand your options such as using refinancing to exit a bridge loan. Selling property or gaining options for other business funding could help exit this type of financing.
The point is to know the end game if you decide to go down this financial path.
Factor the Prepayment
Loan terms, APR, repayment periods, and more. These are all considerations when going into a bridge loan, but they are not the only important ones.
You need to understand the prepayment agreement that comes with a bridge loan. The terms may vary greatly between lenders, knowing them reduces a lot of the repayment burden.
The prepayment may or may not carry a penalty.
A bridge loan with a high APR, longer terms, and a prepayment penalty obviously locks your business into an agreement where you will be paying more in the long run. Comparably, one that does not have any prepayment penalties means you could have the loan paid off not long after it was initially used.
Bridge Financing Alternatives
Explore additional types of business funding that align with your company’s financial goals, needs, and purpose
Your FundingTree offers quite a few types of business funding and business services for clients.
We are a Business’s Best Source for a Bridge Loan
Your FundingTree is where banks and other bridge lenders compete against one another to earn your business. This results in you being offered the best interest rates, terms, and customer service.
Nationwide broadcasters such as ABC, CBS, NBC, and FOX have recognized us for the services we have provided to small business owners across all industries. We currently have an A+ rating with the Better Business Bureau which goes to show how happy our clients have been with the services we provided them with.
Our 90-Second Bridge Loan Application
It takes less than 2 minutes to submit a free online application for bridge funding
Our financial advisors use in-house metrics and guidelines to process your application. Our free bridge loan application comes with no obligations nor does it impact your personal credit score or business’s credit rating.
Why waste time sorting through dozens of bridge loan applications when you could just fill out one? Time is valuable!
Your FundingTree makes the funding application process as quick and easy as it can get! You will receive several quotes from bridge lenders that align with your company’s financial goals.