Commercial Bridge Loans Explained
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What Is a Commercial Bridge Loan?
How Do They Work?
Speed of funding: Businesses typically seek these types of loans because they have an urgent funding need. Check a variety of lenders to find one that can meet your timeline. Incentives to prepay: This is a short-term form of funding — in other words, a temporary loan. Ask lenders if you can receive a prepayment discount or otherwise save money by paying it off even earlier.
How Are They Different From Traditional Loans?
Pros and Cons of Commercial Bridge Loans
Businesses can get cash fast for immediate needs, typically real estate. To facilitate the fast need for funds, the application, underwriting, and funding processes are typically streamlined. Can be used to cover day-to-day expenses while a transaction is in progress.
Interest rates are higher than many other loan types. This is a secured loan with property serving as collateral. They often have high origination fees.
Common Uses for Commercial Bridge Loans
Delay in Customer Payment
Expanding Your Business
Where Can I Get a Commercial Bridge Loan?
Alternatives to Commercial Bridge Loans
Small business grants: Small business grants are lump sums awarded by federal, state, or local governments or by private corporations that do not need to be repaid. Small business loan: Traditional small business loans can be short or long-term, be backed with collateral or have no collateral, and can come with competitive interest rates for those with good credit scores. Business line of credit: A business line of credit gives a business access to funding where interest is charged on the outstanding balance, not on the amount that’s available to use. Businesses can use the funds as needed and repay them in a revolving manner, as long as they don’t exceed the approved limit. SBA loans: SBA loans are guaranteed by the U.S. Small Business Administration (SBA) and offered by certain lenders. Loans are available up to $5 million to cover a wide range of business needs. Invoice factoring: With invoice factoring, businesses can use their unpaid customer invoices as collateral. This helps B2B companies to manage their cash flow with the factoring company, which is then responsible for collecting the outstanding amount.
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