How bridge loans can help small businesses?
Matrix Mortgage Global – How bridge loans can help small businesses?
A bridge loan is a type of short term loan used to help a person or a business get by until they can secure permanent funding, or to provide the funds to help them remove an existing obligation. This type of financing gives a person or business access to fast cash so that they can continue to meet all of their financial obligations during a time of transition until more permanent funding comes through.
The term “bridge loan” refers to the fact that the funding is typically used to bridge the gap between now and a long term permanent solution. It essentially provides temporary financing to address specific working capital or investment needs, and as such you are required to identify another funding source that will pay off the bridge loan on or before the maturity date.
Terms for such a loan can last anywhere from 2 weeks to 2 years. The shorter term comes with higher interest rates and is therefore best repaid in a timely fashion. This is because typically bridge loans carry a higher risk than more traditional short-term solutions. To offset said risks, lenders not only charge higher interest rates but they are also known to seize assets or pursue foreclosure more quickly.
Since bridge loans can temporarily relieve your financial burden and provide you with extra time, you do not actually need to have the funding in place, all you need is a solid idea and a plan for where you will get it.
Bridge loans go by various names throughout different industries and may also be referred to as, hard money loans, or mezzanine financing.
So to sum up here are three ways bridge loans help small businesses!
1) They’re fast!
You can begin a project or service immediately, and possibly earn the money to pay back the loan quickly.
2) You can seek out alternative lenders!
Alternative lenders have less stringent requirements than banks and you can usually secure one if you have at least 2 years in business, an annual revenue of 150, 000 dollars or more and a personal credit score of 600 or more.
3) You can keep your business going while you work out a long term solution.
A bridge loan can be just what you need to keep your business going, your overhead covered and your employees paid while you expand your business. It can help you pay for upgrades, or major repairs that will ultimately increase revenue and help your business grow in ways that you might otherwise not be able to afford.
If you would like to learn more about bridge loans or determine if one is right for your business, contact us today.
At Matrix Mortgage Global, we can help you get started on this path. Call us today at 1-877-371-5293.