What is a Bridge Loan?
How Does a Bridge Loan Work?
To illustrate, suppose a company has been approved for a $1 million loan from a bank. However, this money will not be available for six months, and they are running short on cash. The company could apply for a six-month bridge loan of $50,000 to cover their expenses until the money from the $1 million loan comes through.
Why Does a Bridge Loan Matter?
Often, businesses and individuals find themselves in need of fast funding during an interim period while they work out access to larger amounts of funds. The bridge loan essentially "bridges" the gap between when money runs out and when more money will be received.
The cost of bridge loans is often much higher than more traditional financing methods, and they are only meant to be used in special circumstances. If a company must rely on short-term, high-interest financing to continue operations, chances are good that the company is not viable in the long run.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.