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Introduction to Bridge Financing

December 27, 2019

Managing a business takes a lot of meticulous planning and efficient execution. You have to take care of a lot of things in the organization from manufacturing to marketing of the products. These tasks require a lot of liquid cash. You cannot afford to keep all your assets locked in real estate or other major investments. Liquid cash is equally important for the survival and proper functioning of the organization. Read on to know more about bridge financing and how Credico Capital would help you with it;

What Is Bridge Financing?

Bridge financing or bridge loan is an interim position taken by any organization that wants to get some liquid cash immediately. It is a trick used by companies to establish their short-term position and long-term reputation in the market using a single stroke. It is an emergency provision that caters to the immediate needs of the company until the actual financial aid arrives. The banks that offer these bridge loans usually charge a higher rate of interest.

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Bridge Financing Features

Bridge financing is accessible, easy and very user-friendly. You can get a bridge loan almost instantly, irrespective of the size and scale of your business. It is one of the instruments used by gap financing and offers immediate cash to clients to cover the emergency expenses of the organization. Here are some features of bridge financing explained;

Short Term Loans

Bridge loans are usually for a shorter durations, until the actual financial help can arrive. This duration usually lasts for less than a year and helps growing startups get a kick start over their peers.

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Higher Interest Payments

Because bridge loans are an emergency provision, they tap into the demand of the clients by charging a higher interest payment. When compared to the other industrial loans, bridge financing is convenient but ultimately more expensive for the organization.

Demand for Collateral Security

Also, with bridge loans you always have to provide some sort of collateral security which is equivalent or more than the amount you’ve requested for. This gives the bank an idea of your credit worthiness. Failure to pay the amount in the stipulated time can lead to the bank confiscating your collateral for their benefit.

Finding the right banks to offer bridge financing facilities is a confusing choice indeed. Thankfully, the entrepreneurs in UAE can trust Credico Capital for all their monetary needs. Visit us now and learn more about the kind of services we offer.