If you need a loan quickly and you don’t have time to wait for traditional loan approval, a bridge loan from HML Solutions may be the right solution for you. This type of loan offers very quick approval, but it’s only designed to be a short-term loan. Unlike most other types of loans, bridge loans do come with higher interest rates. That’s why they’re generally only recommended for certain situations, such as for business acquisitions. So if you want to acquire another business but you don’t currently have the cash flow to jump on the opportunity, a bridge loan can help, though you should be thinking about how you can pay it off within the short loan term allotted to you.
How Bridge Loans Work
Before you decide to apply for a bridge loan, there are some things you should know. Here are our bridge loan basics.
- Approvals are fast and provide you with cash flow in a pinch.
- This is not the type of loan to apply for if you need long-term financing. However, it can bridge any financial gap you have while you wait for permanent financing.
- Generally, the cost of a bridge loan coincides with the loan term. The shorter the term, the less expensive the cost of the loan.
- Bridge loans come with a variety of fees, high interest rates and high collateral. That’s why you should make sure you’ll be able to come up with the money required to not only pay off the loan, but all fees and costs associated with it.
- Collateral for this type of loan can typically include inventory or real estate.
- Borrowers with good credit scores and low debt are likely to receive better bridge loan interest rates than borrowers with poor credit scores or high credit card debt.
- Open bridge loans don’t already have funds lined up for loan repayment.
- Closed bridge loans already have funds lined up for loan repayment.
If you have questions about applying for a bridge loan, we’d love to answer them. While this type of loan isn’t ideal for all situations, it can help you avoid missing out on appealing business acquisitions due to lack of funds.
Questions to Ask Before Applying for a Bridge Loan
Before applying for a bridge loan, here are a few questions you should ask yourself:
- Do I really need a short-term loan solution, or is there a different type of loan that would be more appropriate for my situation?
- Are the fees and collateral associated with this bridge loan worth paying? Will the business I’m acquiring be worth the risk of taking out a bridge loan?
- Am I lining up long-term financing that I can use once I pay off my bridge loan?
Once you honestly answer these questions, you’ll have a better idea about whether or not a bridge loan is truly the best option for your current situation.
We’d love to talk to you more about the process of applying for a bridge loan and determining if this is the right loan solution for your needs. Contact us today and we’ll help you schedule your obligation-free consultation.