Business Bridge Loan Financing Basics
Real estate bridge loans are among the most popular private loans on the market today, and that’s not likely to change any time soon even if more and more borrowers are turning to that same market for long-term equipment financing and commercial capital loans. That’s because bridge loan products aren’t just good for flipping or rehabbing properties, they’re also great ways to raise short-term working capital for practically any business.
Put Your Equity To Work
If you have equity in a property owned by your business, bridge loans can get that capital out and put it to work with a low-cost, interest only repayment structure until the end of the loan term. That allows you to make the most of the new capital, whether it’s by expanding your available labor, buying supplies, or just covering cash flow while you wait for invoices. After the big project or expansion pays off you can pay in a lump sum before the end of the term or finance it into a longer-term instrument.
Tap Into Your Real Estate Investments
Bridge loans are easy to reuse once you get into the rhythm of financing your big projects. Once you’ve paid back a loan against one of your commercial properties, you can refinance it again the next time you need a large sum of working capital. It’s an excellent way to manage your property investments so you can take advantage of real estate appreciation without tying up all your reserve capital.
Finance Cash Flow During Slow Seasons
With the ability to look ahead six months to a year for the bulk of your repayment obligations, bridge loans are also attractive for business owners who regularly experience seasonal downturns. They provide easy access to off-season capital, and with no prepayment penalties, there’s no reason to wait for the lump sum due date to pay off principal. The flexibility of these loans during repayment just makes them more attractive to a wider range of business owners.
Learn More About Bridge Loan Terms
There are a variety of ways to use these loans, and each lender has a different focus. To get the best cost of capital for your intended purpose and repayment terms that match your business cycle, you need to find bridge lenders who focus on working capital loans. That way, you’re getting a bridge instrument built to fit your business perfectly. It’s also a good idea to comparison shop until you find the lender who offers you a great deal and keeps you coming back whenever you need bridge financing.