A Note On The Bridge Loan

1509 WordsDec 18, 20167 Pages
A bridge loan has nothing to with bridges; it is a short-term loan from a bank or other lender. For any business owner the knowledge of bridge loans may mean the difference between failure or success of a business venture. Commercial bridge loans are also known as hard money loans and they are used by business owners as a stop gap arrangement while a permanent loan is being secured. Even though home owners sometimes use bridge financing between the time they purchase or sell their homes, it is more frequently used by business people to refinance or purchase all types of commercial properties including commercial real estate. Today commercial bridge loans are being used for financing a wide range of commercial properties including hotels, factories, industrial properties, retail businesses and commercial properties having a variety of uses. Essentially a bridge loan is used for bridging the current gap between a buyer 's immediate need for cash for closing a deal and the availability of a long-term loan package for financing the deal. The terms of bridge loans are short and vary between 12 to 36 months. After that period the long-term lower cost permanent financing package, usually from the same lender, takes its place. Like other types of loans bridge loans also have their benefits and drawbacks. One of the major benefits of most bridge loans is that they are designed to close very quickly. This makes them very useful when fast cash is required to close a commercial
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