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| What is a Bridge Loan?
The Bridge Loan has many synonyms in the businesses world here are the most common ones: bridging loan, swing loan, gap financing and bridge financing. Now days this loan is rarely used. The main purpose is to cover a gap between the ending and beginning of a new loan. This loan has a fast maturity rate between one and six months.
For example your selling your house but you didn't find a buyer yet and you have already chosen the house to move in and you need a down payment. To cover this gap you can go to the bank and ask for a bridge loan so you won't loose the house which your intending to buy. And you pay back the loan as soon as the old house has been sold. It works the same way with a company for example it's issuing stocks to raise money and this will close in three months time. For the company to run smoothly they can turn for this loan to cover the gap until the funding goes through with the stocks. | | | | |
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