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Bridge financing (otherwise known as bridge funding, bridge capital, interim financing, or gap financing) is a type of loan that acts as a temporary fix to help businesses cover their expenses until they can obtain a longer-term financing solution. Usually, bridge loans are secured by collateral in the form of real estate, receivables, or a personal guarantee. Additionally, the loan terms for small business bridge financing normally range from 6 to 12 months.
Bridge financing is a useful tool for business owners to use when they anticipate that their funds will run dry in the near future while, at the same time, expecting a larger injection of capital not too long after that; small businesses can use bridge funding to “bridge” the financial gap between those two points. It is also a great option for businesses with “seasonal” cash flow.
You can avoid finding yourself in a struggle to climb out of a valley of debt with bridge funding. Use it as a financial fix that will help you stay in the black until a more permanent solution can be arranged.
As a small business owner you may find yourself at times waiting on a lump sum of money either from receivables or services rendered via a contract. You may also be waiting on funds from a traditional loan source such as SBA or Conventional financing. When this happens it makes covering your weekly expenses such as payroll stressful. It is during these instances that a long-term loan may not be the best fit and you may not need to borrow the funds for more than just a few months. Instead of locking your business into a high interest long term loan, Mint Financial’s Bridge Loans are the perfect solution for times when you need short-term funding with early buyouts (payoffs).