bridge loan

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Bridge Loan

A loan for a short-term period, usually two weeks to three years, until long-term financing can be arranged or an obligation is removed. Interest rates are relatively high, often 12-15%. Bridge loans are used to satisfy working capital needs; for example, if a company is arranging for an IPO or a bond issue in the coming months, but needs capital before then, it may take out a bridge loan. In doing so, it will plan to pay back the bridge loan with the money raised in the longer-term financing.

bridge loan

A short-term loan that is taken out until permanent financing can be arranged. Also called swing loan.

bridge loan

A short-term loan intended to bridge the gap between other transactions. (1) Temporary financing obtained at the end of a construction loan period but before permanent financing can be arranged. (2) A loan obtained by a home buyer when the equity from an existing home is necessary to provide the down payment for a new home,but the buyer has been unable to sell his or her old home as of that time (frequently offered by employers who transfer employees to new cities).

Bridge Loan

A short-term loan,usually from a bank,that “bridges”the period between the closing of a home purchase and the closing of a home sale.

To qualify for a bridge loan, the borrower must have a contract to sell the existing house. This is the same as a “swing loan.” See Housing Investment/Buying the Next Home Before the Existing One
Is Sold.

References in periodicals archive ?
As the home purchase market continues to heat up in many US markets, repeat buyers are increasingly looking to a bridge loan as a way to manage the logistics and costs of buying a home before selling their current one.
Bridge loans drive our permanent business and in many cases we offer these loans because we want to strengthen a relationship with that client.
AGEA raised $4 million in bridge financing in 2000, but when the market went south, the terms of the bridge loan gave its providers extremely attractive terms for taking a stake in the company.
A bridge loan is used as a temporary means to carry a company during its start-up phase or until long-term funds such as grants or other loans can be secured.
BRIDGE LOANS IN MERGER AND ACQUISITION TRANSACTIONS
Trevian Capital, a direct special-situations lender that provides flexible and reliable short-term bridge loans for commercial real estate opportunities nationwide, said it has funded four first-mortgage bridge loans in four states, totaling USD36,950,000 in recent weeks.
A $10 million bridge loan collateralized by a multifamily building on East 64th Street on Manhattan's Upper East Side.