Bridge loans are just what their name implies. They can literally be your “bridge over troubled water” when you need a little help in between longer-term loans or more financially secure times. Take a look at the following advantages to see if they’re the right choice for you:
Short Approval Times
When it comes to applying to banks for loans, it often takes weeks or even months to gain approval for the financial help you’re seeking. However, with bridge funding, you can usually get it in just a matter of days. This type of lending is specifically meant to tide you or your business over while you wait to get approval for longer-term loans. Because that is the purpose of bridge funding and also since it’s offered by private lenders instead of banks or other financial institutions, the approval time typically turns out to be shorter than for other types of loans.
Flexibility in Repayment
There are two primary ways to repay your loan. Through one method, you can choose to pay before you have secured your longer-term financing. If you fulfill your obligation in the amount of time you’re given, you’ll substantially improve your credit rating, thus making you eligible for future loans you might not have qualified for otherwise. On the other hand, you can wait until you secure a longer-term loan and use that money to make your payments on your bridge loans.
Variety of Situations
Bridge funding is available for a plethora of uses, including both professional and private purposes. For example, you could use the loans for additional support when your business is experiencing a “low” time (when sales aren’t going too well) or perhaps to fund a short-term project. Additionally, you could use the loans to buy a new house while your existing house is still on the market. Another purpose for the loans could be to help you purchase or renovate real estate property.
Short Repayment Periods
At first, this might not sound like an advantage. But when you think about it, who wants their debt or interest rates to pile up over time? Not only that but there might be downturns in the economy or you might face personal financial crises that can keep you from paying off what you owe down the road. Sometimes it’s better to have a short deadline to force you to pay off your loans quickly so you can move on to more secure methods of being financed.