What is Bridge Financing and How Does it Work?

It was in 1947 that The World Bank started giving out its first loan—$500 million. Other forms of loans and funding soon made the scene, one of the most prominent of these being bridge loans. And although the term might sound all “modern” and “new,” it really isn’t. 

Bridge loans began sometime in the 1960s—and nobody could be luckier that they began than construction hopefuls, investors, and builders.

So, What is a Bridge Loan?

Let’s say you have your eyes on a new property that you want to buy. At the moment, however, you don’t have cash in the bank. What you do have, however, is an existing house. And you start thinking, “What if I can make up for the cost of the purchase by selling this house?” 

But then if you were to sell your house before you bought the new one, where would you go? Let’s say you rent a place. What if it takes ages for the deal to close on your house? What if someone buys the new property before you can sell off your house?

That’s where bridge loans come in. They help you out when you’re in a cash crunch.

They’re temporary loans and are secured against existing property. They enable you to buy a new property, sell off your old one, and then repay the loan. You can even say you’re just borrowing down payment—it’s pretty neat. 

money loans

Why It’s So Great

If you keep hearing the term “bridge loan” thrown around a lot, it’s because more and more people are trying to get this kind of loan. And if such a large amount of people have all put their faith in bridge loans, it means that bridge loans work. Because there are just way too many benefits that come with bridge loans. 

The greatest of these benefits is that you get to buy time—you have a few months where you have to make no payments—which is something that can’t be said of when you take out a loan from a bank. Whatever equity you have on your existing house, you can use it without any issues for a new purchase. It’s a flexible cash flow that gives you no headaches like standard loans are supposed to do!

How to Get a Bridge Loan?

Global Capital Partners Fund, LLC is a lending and financing agency based in New York that deals with all kinds of loans: mezzanine loans and asset-based funding and bridge loans

Need to get in touch? Leave them a message here. You can also give them a call at +1-800-514-7350.

Categories: Finance

Leave A Reply

Your email address will not be published.