What is Bridging Finance?
Once you understand what the term, ‘Bridging Finance’ means, it’s easy to understand how it got its name. The purpose of a bridging or bridge loan is to provide short term cash for a real estate transaction until permanent financing is secured. Bridge loans are commonly used to ‘bridge the cash gap’ when completing commercial real estate transactions. Everyone knows it’s difficult to time the sale of one property to coincide with the purchase of another property. The slightest delay can wreak havoc on the transactions and create obstacles that are difficult to overcome. Having to pay two mortgages, whether for residential or commercial purposes, for any length of time can spell financial disaster. This is where bridging finance helps. The goal of a bridge loan is to remove this financial obstacle so that a commercial transaction can proceed. In the majority of situations, ‘bridging finance’ provides additional funding so a company can continue to pay the lease on its existing commercia
