Owners of small and mid-sized companies know the troubles of liquidity all too well. Even if your business turns a profit, money can get tied up in places, resulting in the need for short-term capital.
Although there are many ways to finance the need for short-term capital, bridge funding is among the more popular forms of short-term capital. Let’s take a closer look at what bridge funding is and how it works.
What are bridge loans?
Bridge loans are a form of short-term financing that is used by an individual or business entity until they can secure a more permanent or long-term funding solution. As the name suggests, it essentially bridges the gap between the now and the time until they need a more permanent solution.
Bridge loans generally don’t last longer than a year because they have relatively high interest rates. They are backed by collateral such as real estate or inventory.
How do bridge loans work?
Bridge loans work like asset-based lending solutions. However, they typically come with shorter approval times so that businesses don’t have to wait too long before getting access to the money.
For businesses, the money may be needed to buy raw material for a large order. Once the order is complete, and the payment on the order is received, the loan can be repaid within a few months.
For homeowners or real estate investors, bridge loans can help close the deal on a new home before the old property can be sold. Many people move into new places by selling their old homes. However, if they like a new place and haven’t been able to sell their previous home, bridge loan solutions are a viable solution for short-term funding.
Are bridge loans right for you?
Given that no two businesses are the same, it’s best to talk to an asset-based lending expert who can help you find the answer. GCP Fund specializes in different asset-based lending solutions in Seattle, WA, and can help you find a tailored solution for your needs.
They work with real estate investors, startups, and small business owners to provide easy financing solutions through bridge loans, asset-based lending, and other acquisition-based financing options. Reach out to them at +1-800-514-7350 or write to them at firstname.lastname@example.org.