Bridge loans have become extremely popular, so chances are good that you have heard the term before. But what are bridge loans, exactly? And how do you apply for one? In our definitive guide to bridge loans, we answer these and other questions.
What Is a Bridge Loan?
As their name implies, bridge loans help you get from point A to point B when you need cash fast.
Bridge loans are also known as swing loans, gap financing, or interim financing.
This is a short-term financing solution that fills a gap of capital. Bridge loans are usually repaid within a year and are designed to respond to a sudden need for cash. That’s why the approval process for bridge loans is usually faster compared to other financing options.
What Are Some Common Uses of Bridge Loans?
- Real estate. This is perhaps the most popular way to use a bridge loan. For example, borrowers often take out a bridge loan to cover the closing costs of a new home before they sell their previous one.
- Inventory. Some companies use bridge loans to increase their inventory before the cash from peak season begins flowing into the business.
- Cover expenses. Generally speaking, bridge loans can be used to cover any type of expenses that arise while you wait for a more permanent form of financing. This includes payroll, insurance, repairs, etc.
What Are the Pros and Cons of Bridge Loans?
Bridge loans offer many interesting advantages, including:
- A great way to get cash fast.
- Bridge loans are designed to be flexible. For example, in most cases bridge loans do not have repayment penalties.
- You can use them for a wide variety of purposes, from purchasing real estate to shoring up retail inventory.
However, there are some other aspects you should keep in mind. For example:
- Interest rates may be higher compared to other alternatives.
- It’s a short-term solution. If you are looking for long-term financing, there are other options available (see below).
To learn more about this topic, check out our previous post, “Bridge Loans: the Pros and Cons.”
How Do I Get a Bridge Loan?
Applying for a bridge loan with Gellyfish Commercial couldn’t be simpler. Just visit our homepage by clicking on this link. There, you will be able to:
- Schedule a free consultation to get started on your bridge loan
- Chat online with an agent to get answers to all your questions
What Are Some Alternatives to Bridge Loans?
Bridge loans can be really useful in certain situations. However, they’re not for everyone. If you are looking for an alternative to bridge loans, Gellyfish Commercial offers options for everyone:
- SBA loans. These loans are partially guaranteed by the Small Business Administration, and offer more convenient terms and rates than conventional loans. However, with these loans you have to use the loan proceeds in very specific ways dictated by the SBA.
- Conventional loans. If you want to repay your loan over a long period of time without the constraints of an SBA loan, conventional loans are a good alternative.
- Revenue-based loans. If you can’t qualify for other types of loans, revenue-based loans may be the answer. Here, instead of paying a preset amount each month, you repay your loan with a percentage of your profits.
Bridge Loans vs Conventional Loans
This is one of the most common questions about bridge loans: how do they stack up against conventional loans?
The truth is that this is an apples-to-oranges comparison. These are different financing tools that serve different purposes. Here’s how to know which one works for you:
- Bridge loans usually feature higher interest rates than conventional loans.
- While interest rates are higher, the approval process for a bridge loan tends to be faster than with conventional loans.
- Bridge loans have short terms, while conventional loans can be repaid over 15, 20, or even 30 years.
Looking for a Bridge Loan in California? Gellyfish Commercial Is Here to Help!
If you need bridge financing in California, or anywhere in the United States, Gellyfish Commercial can help. Contact us today by email (email@example.com), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our financing solutions.