A business bridge loan serves as a temporary financing solution designed to bridge the gap until a permanent financial arrangement is secured or a commercial debt obligation is resolved. Typically lasting between 1 to 12 months, these loans may involve a single repayment at the term’s end or a series of daily, weekly, or monthly payments. Interest rates for bridge financing typically range between 8-20%, although they can be higher depending on the specific type of bridge loan or funding facility.

Bridge financing is commonly utilized for various purposes such as working capital needs, covering operational expenses while awaiting permanent SBA financing, debt settlement, commercial real estate acquisition or development, and more specific requirements like vendor payments, payroll, tax lien settlements, accounts payable management, inventory purchases, or fulfilling outstanding purchase orders. Compared to traditional financing options, bridge loans often offer quicker funding, making them attractive to businesses awaiting more conventional financing options. However, the expedited funding process entails higher risk for the lender, resulting in higher costs for the borrower.

Various types of bridge business lending cater to the needs of small and mid-sized companies, including real estate bridge lending and working capital bridge lending. These loans are available through traditional banks, small banks, community banks, credit unions, as well as alternative and nontraditional lenders offering mid-prime loans, merchant cash advances, factoring, asset-based lending, and invoice finance.