Commercial Bridge Loans

Written by Robert Mac
Bookmark and Share

Commercial bridge loans are only one of the many ways to create cash flow for your business. A bridge loan is a short-term loan that many people get while purchasing a new business property. Since commercial bridge loans let you "swing" equity from one property to another, they are also called swing loans.

The only way commercial bridge loans work is when businesses use their assets as collateral for securing funding. A company can pledge office equipment, real estate, accounts receivables, or any number of other assets as collateral. If they default on the loan, the lender can seize their assets to cover the cost of the loan.

Short-Term Financing with Commercial Bridge Loans

Generally, commercial bridge loans are a temporary measure, used only when a business property is in its final stages of closing. For example, a company may be selling one office building and looking to buy another. While the first one is in escrow--but they haven't received payment for it yet--they can use its equity to get a loan which they apply, or "bridge," to the second building.

After the sale of the first building is finalized, the company usually uses money from the sale to repay the bridge loan. Once the dust has settled, the company can establish long-term financing on the second building. (While commercial bridge loans are available for the business world, similar bridge financing is available for individuals who may be buying and selling homes simultaneously.)

Commercial Bridge Loans and Other Financing

There are many kinds of very specific loans in the world of finance and real estate. Commercial bridge loans are just one. You can get secured loans (a loan with collateral) or unsecured loans, long- or short-term loans, new construction loans or loans for completing a project. There are even hard money loans for people with bad credit reports; the rates are higher than usual, so be warned.

Loans are one way to get financing, but you can also leverage some of your assets to secure other funding. For example, you can sell debts that are owed to you (accounts receivables) for financing--this is called accounts receivable financing. Similarly, you can exchange purchase orders into cash as a form of financing.

Other Ways to Create Cash Flow

There are a number of other ways your business can reduce its debt, collect payments, and turn IOUs into working capital. For example, having a third party business manage your debts can eliminate administrative costs, headaches, and your debt as well. Since they are proficient at negotiating with banks and other lenders, they can reduce your interest rates, eliminate some late fees and other charges, and consolidate your debts into one simple monthly payment instead of a deskful of bills.

Financial managers can also help you recover bad checks written to your company. There are more than 450 million bad checks written each year in this country, and these specialists have experience in recovering them--many times without cost to you. By letting them run the financial side of your business, you can focus on getting your business back on its feet and doing its core duties--not bookkeeping.


Bookmark and Share