Pennsylvania Commercial Bridge Loans

A commercial bridge loan is exactly what it sounds like. Businesses sometimes take out bridge loans when they want to expand, and often when a company is thinking of expanding, its funds are tied up in research and development and planning. Purchasing or building a new warehouse or developing a new product, however, takes money. In most cases, bridge loans are financed using the company's equity or other collateral.

Typically, a bridge loan is made for the short term, up to one year or slightly longer. Usually the interest on a bridge loan is higher than it would be on a simple loan. Depending on what the company wants to use the money for, a bridge loan can be structured much like a second mortgage on a home. It may, in fact, represent a lien on the company's collateral.

Pennsylvania Bridge Loan Outcomes

A bridge loan, as noted above, carries a higher interest rate than many other loans. If the company finds a great property at the right price but has no available cash, a bridge loan can be a good solution. If the company is trying to restructure for better efficiency, a short-term bridge loan provides them with what is sometimes called gap financing. Cash from the bridge loan allows the company to move ahead with expansion, restructuring, mergers, and more.

At the same time, the company should also be looking for a source of long-term financing with which to pay off the bridge loan either ahead of time or on time. The longer range financing can be significantly less costly than the bridge loan, so the sooner the interim loan can be paid off, the better. Pennsylvania commercial bridge loans meet a real need in the business world by allowing good ideas to proceed and minimizing stress during the process.