What is Bridge Financing

Bridge financing - what is it?

However, some institutions accept payments in the form of equity capital to the financing company, often to sell later to investors. A bridge loan with an initial maturity of one year, for example, is likely to have an upward quarterly change in interest rates. Bridging Finance - What is a bridge loan? In addition to long-term corporate credits and line of credits, there is also the option that interim financing would make sense. Generally, the borrower knows when this vast amount of money arrives and is able to withdraw the loan around that time.

If this is the case, the bridge facility actually means less out of pocket costs for the borrower.

For how long can a bridging loan run? Bridging credits are in most cases provided for short-term use. Not uncommon that borrowers use this kind of credit facility when they need cash to continue for a three- to six-month timeframe while waiting for the expected funds to come.

Where can Bridging Business Finance be used? There are different causes for the credit, but in each case a flat -rate amount of money is expected at a certain point in the life of the credit. It is the fact that the credit is only needed for a certain amount of money that makes this kind of agreement possible, as it closes the loophole between today and the date on which the money will be received.

After the Offer has been completed and the Stocks have been disposed of, part of the proceeds may be used to pay the remainder of the Bridge Credit. A further application of interim financing can be found in real estate developments. Often, open bridging is the best option if the borrower has a general understanding of when an inflow of resources will occur but does not have a particular date for the provision of the creditor.

These types of agreements mean that the creditor assumes a greater degree of exposure as the resources may or may not emerge at the scheduled time. This makes it more likely that the borrower will fall behind with the conditions of the credit. It is likely that in this case the creditor will use a higher interest will.

If the bridge is locked, the borrower has a fixed date to receive the means needed to pay the remainder of the credit.

Mehr zum Thema