Bridge Financing

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What is Bridge Financing?

Bridge financing allows startups to cover their short-term costs with a loan. Like its name, bridge financing bridges the gap between cash flow shortages and the returns of long-term investments, assets, or revenues. Bridge financing can be a significant lifeline for startups when they need an immediate cash injection.

Bridge Financing Examples

Examples of when startups use bridge financing include:

  • Example 1. Meeting company payroll for the next three months
  • Example 2. Obtaining capital assets that generate revenues
  • Example 3. Purchasing office, warehouse, and retail space
  • Example 4. Paying on existing loans with a higher interest rate
  • Example 5. Making balloon loan payments that cause expenses to increase

Here is an article that goes further into Bridge Financing.

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