The Benefits of Bridge Loans
During every business owner’s career, golden opportunities occasionally present themselves. When the funds necessary to take advantage of these circumstances are not instantly available, bridge loans come into play. Alternatively known as hard money loans, these financial instruments leverage concrete assets, like real estate, to make cash accessible. Here are some excellent reasons why this style of funding should be closely considered.
Conventional banks take significant time to process loan requests. Lenders who fulfill bridge loans are able to act far quicker, as they are not bound by the same legal constraints mainstream institutions must observe. Entrepreneurs securing deals that threaten to expire extract obvious benefits from these loans.
Say your company has a significant bill coming due. It must be paid, but your operating expenses must also be fulfilled and the money to cover both is simply not there. Closing down for any amount of time is highly negative. In addition to stagnating profit, locking the doors leaves a terrible impression, undermining confidence and mindshare within the general public. Procuring a bridge loan allows you to avoid both falling into default and interrupting business.
The only constant is change. As time marches on, partnerships can fall apart. Even when interpersonal conflict is not the cause, life circumstances, such as marriage, illness or pandemics, can forever alter a company’s trajectory. A bridge loan can be used to make your former ally whole. Doing this, you can comfortably go your separate ways without the threat of shuttering forever.
Agreements can be structured in any number of ways. Repayment scheduling, in particular, is one critical element that may be liberally altered. For those who fear difficulty handling monthly disbursements, the ability to tailor payment frequency makes a bridge loan ideal. Never sign a loan contract unless you feel comfortable with the parameters of your obligation.
Conventional loans have concrete operating procedures from which their issuers cannot significantly deviate. A bridge loan comes with no such limitations. When approaching one of these lenders, negotiate your terms however you see fit. Those with a talent for deal-making will inevitably secure a more favorable agreement than would otherwise be possible.
Bridge loans are an appropriate solution under certain circumstances. For accelerated delivery and endless adjustability, they are unmatched. If your business is experiencing change and traditional loans are not feasible, remember the advantages that come with this alternative form of funding.