
What is a Bridge Loan?
How to Use Bridge Financing:
- Purchase inventory and materials
- Pay for equipment repairs
- Meet payroll
- Update necessary technologies
- Bid on multiple projects
- Have cash for emergency costs
How Bridge Loans Work:
When people think of bridge loans, they often think of home loans or mortgage loans. These are used by home buyers investing in real estate or buying a new home. As a business owner, you’ll use bridge financing differently.
As we mentioned, bridge loans can be used in the the middle of projects, in between customer payments. Having bridge financing will provide your business with enough cash flow to finish a job.
For instance, perhaps you own a construction company, and are remodeling an existing home. The customer will pay you at the start of the project. Then, you won’t get paid again until the job is completed.
Once a bridge loan is secured, you can use that financing to finish the job. You’ll be able to pay employees, purchase materials, and afford any other necessary expenses. Then, when you’re paid at the end of your project, you’ll be able to responsibly pay off the loan (probably through monthly payments) and move on to your next job. It’s that easy!
Many businesses rely on bridge financing to operate; and your business could benefit too from this option!