When Should You Consider Using a Bridge Loan?

11 Sep When Should You Consider Using a Bridge Loan?

For some business ventures, the only the entrepreneur needs to get started is an idea, a computer, and a little bit of startup capital. On the other hand, some operations require property acquisition, building construction, and more. Business owners often need funding assistance for these initial costs. Depending on the industry, entrepreneurs may find traditional that banks are unwilling to make the loan. Entrepreneurs who find themselves in such a situation may want to consider a bridge loan, such as the ones you can get through Nelson Funding. Here are a few things business owners should know about bridge loans, and when should consumers consider using one.

What is a Bridge Loan?

Generally speaking, a bridge loan is a short-term financing solution where a borrower sets a short-term loan to cover a gap in funding until a permanent financing solution is reached. Bridge loans can be used for terms that a few months or several years. These types of loans are often used in real estate, but they can be used in other situations as well. In commercial real estate, business owners can secure a bridge loan that can be used to get a new company up and running. Once the company starts operating and making money, the business owner can use those earnings to secure a more traditional loan.

What Are the Benefits of Bridge Loans?

Bridge loans can reduce the stress of entrepreneurs who require a lot of money to get their business venture off the ground, but their project is something that lenders are reticent to fund. For example, cannabis-related industries are popping up around the country as a growing number of states make exceptions for medicinal use. Entrepreneurs who want to build a grow operation or warehouse for cannabis products will find it hard to get funding from traditional lenders. Nelson Financing can help business owners in this situation get the short-term financing they need to get the operation off the ground. A bridge loan ensures the owner has the capital they need to get past the initial hurdles of starting a business in a non-traditional sector.

When Should You Consider a Bridge Loan?

There are many situations when a bridge loan may be a smart funding choice for business owners and entrepreneurs. It can take a lot of money to get the ball rolling in certain industries, and traditional lenders shy away from potentially risky investments. We already mentioned operations that involve hemp or cannabis, where the disconnect between federal law and state law makes it harder to get business loans from a bank. Similarly, entrepreneurs trying to build a new shopping center or retail establishment often find that concerns over online competition make their project less secure in the eyes of loan officers. Nelson Financing can use bridge loans to help entrepreneurs fund build construction and other startup costs. Our bridge loans are generally for projects that cost more than $2 million. And the amount loaned is typically between $15 million and $30 million. Once the business is established and bringing in revenue, there’s less risk for traditional lenders. Afterward, Nelson Financing can help the entrepreneur find a more permanent funding solution.

How to Get the Best Terms for a Bridge Loan

Like any temporary, short-term funding solution, the rates for a bridge loan are higher than for more traditional loans. It’s vital for sellers to search for the best offer when considering a bridge loan. At Nelson Funding, we work with the best private debt lenders with reasonable terms rates for bridge loans. These loans have terms between six months and three years, and borrowers can get sums from $800,000 to $30,000,000. The interest rates vary from loan to loan, but it ranges from 6.99% to 10.99%.

Nelson Financing has some of the fastest closing bridge loans in the industry, and we can fund operation in most places in North America. For example, we have helped business owners set up multi-million dollar resorts in the Caribbean. And Nelson Financing is the place to go for fast bridge loans. Our 10-day bridge loans are as speedy as they sound. We’ve teamed up with the best and fastest private debt lenders to offer our clients bridge loans that close in five to ten days.

Contact Nelson Funding to learn more about bridge loans, and if they are the right option for your situation. We specialize in many financing options, so we can offer the most appropriate funding solution for your needs.