While one may have heard the term Bridge Loan before, one may also know it as a swing or gap loan. These forms of financing are primarily prevalent in the commercial sector, offering a way for individuals or companies to bridge the proverbial gap between a short-term loan and a long-term, more permanent one. These loans are often used to pay off a mature note, allowing the borrower to have a break until the big loan is finalized.
A Simple Definition
To put it in simple terms and provide a bridge loan definition, a bridge loan is a loan carried for a short period of time that customers use until a permanent loan is finalized. Using a bridge financial option, individuals are able to close the gap between the two periods of time, making certain they have enough cash to continue doing business. The loans are typically done in cases where one wants to close on either commercial or business properties. Read on for additional info .
Business owners find numerous advantages
to utilizing commercial bridge loans. When funds are tight between funding opportunities, a bridge loan will allow them to get a new business going, pay their employees or contractors and expand their product lines. Further, they're able to move stocks around, providing a financial cushion during uncertain times. Banks can be rigid, and with that in mind, alternative lenders are often an excellent source of funds to cover the little things until the big funds come through from the bank. Additionally, many people find that a commercial bridge loan will provide a break when the markets aren't working right for them and an immediate infusion of cash is required.
What to Look For
When one's trying to decide“is a bridge loan right for you?” look for a financial partner to help provide the cash one need in the short term, maybe 90 days, and make sure to find one with the right qualifications. It shouldn't be a difficult process. The lender should be flexible, giving one the freedom to enhance,
purchase or fix up a commercial building or home. They should have experience with other borrowers who are trying to buy a house while waiting for the other one to sell. They should approve of one utilizing the funds to cover the down payment, a common reason people take out a bridge loan.
Why Not Use a Bank?
That's a good question. One would think that banks would be on board with this type of financial product, however, according to realtimecampaign.com,
they are quite difficult to come by at a traditional bank. Instead, alternate providers are easier to work with and only require simple-to-provide requirements. For example, they will typically require homeowners to have paid off their existing mortgage and for a business owners to have superb credit scores. They also require a low debt-to-income ratio to approve a bridge loan. The good news is that the approval process tends to be relatively quick, with approved candidates seeing their money much sooner than with a standard type of loan.
It must be said that these types of short-term loans do carry a higher interest loan than that of a traditional loan, but on the other hand, they're also paid off much quicker, too. With that in mind, one would not be paying a high amount of interest for very long. Look for a reputable company like l3 funding to help one out.
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