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Bridge loan
Also called bridge financing, gap financing, interim loan.
Short-term financing taken to cover the gap until a defined event, usually a sale, a refinance or a permanent facility closing, and repaid from that event rather than from operations.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
A bridge is defined by its exit, not by its rate. The lender underwrites the event that will repay it: the property sale, the SBA loan closing, the receivable landing, the investor round. Term is short, structure is usually interest-only with the principal due at maturity, and pricing reflects the compressed timeline and the fact that the money is meant to be temporary.
Common shapes in small business include interim financing while an SBA 504 debenture is arranged, funding a business acquisition ahead of permanent financing, covering a seasonal build ahead of a peak, and property purchases that need to close faster than a bank can move.
Cost is usually the sum of three things, not just the rate: an origination fee at closing, interest during the term, and an exit or extension fee. Extension options are worth reading before signing, because they are worth a great deal if the exit slips.
Cash advance funders sometimes market their product as a bridge. An advance repaid daily out of operating cash is not a bridge in this sense; it is repaid from operations, not from an event, and there is no defined exit other than getting to the end of the payback.
Where this one catches people
The exit is the whole risk and it is the borrower's, not the lender's. If the sale falls through or the permanent loan is delayed, the balance is due at maturity in full, and a bridge lender holding first-position collateral on the asset has both the incentive and the mechanism to enforce. A bridge with no fallback plan and no committed take-out is a bet with a deadline.
Worked through
A 400,000 bridge at 12 percent interest-only for 9 months, with 2 points in and 1 point out. Interest is 400,000 x 12 percent x 9/12 = 36,000, the origination fee is 8,000 and the exit fee 4,000, so the total cost of the bridge is 48,000 against principal repaid at maturity in one sum.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
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Bridge loan — common questions
What does bridge loan mean?
Short-term financing taken to cover the gap until a defined event, usually a sale, a refinance or a permanent facility closing, and repaid from that event rather than from operations.
Where does bridge loan catch people out?
The exit is the whole risk and it is the borrower's, not the lender's. If the sale falls through or the permanent loan is delayed, the balance is due at maturity in full, and a bridge lender holding first-position collateral on the asset has both the incentive and the mechanism to enforce. A bridge with no fallback plan and no committed take-out is a bet with a deadline.
Is bridge loan the same as an interest rate?
Bridge loan is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does bridge loan apply to?
Working Capital, Term Loan, SBA Loan.
Is there a worked example of bridge loan?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside bridge loan?
Balloon payment, Closing costs, Commercial bridge loan, Exit fee, Interest-only.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.