Bridge loans are short-term financing solutions that provide an influx of cash until borrowers secure a more permanent type of financing. Bridge loans have short repayment terms, typically up to one year or less. They are usually backed by collateral and have relatively higher interest rates than other types of financing.

Bridge loans can be used by businesses to address short-term cash flow gaps. They can be used to purchase real estate, equipment, make repairs, or cover operational costs like bills, payroll, rent, and supplier fees. They can fill the gap between immediate financing needs now, and more permanent financing solutions to come.

Oftentimes, bridge loans are used by homeowners who need funds to purchase a new home while waiting for their current home to sell.

How Bridge Loans Work

Also called interim financing, bridge loans help businesses cover cash flow gaps during times when financing is needed, but not yet available. They’re also popular when a company has to repay one loan but hasn’t received the new, long-term loan.

Businesses can apply for bridge loans at banks, some credit unions, and online lenders. The process is fairly similar to applying for business loans or lines of credit. The biggest difference is that most lenders will want to see collateral in exchange for a bridge loan. This is especially true when financing is for real estate or equipment.

It’s important to remember that bridge loans are a short-term fix. They’re meant to mitigate cash flow gaps here and now, until a long-term solution comes into play or the immediate obligation passes. If you need financing for prolonged projects or investments, it’s best to explore long-term solutions – such as business loans or business lines of credit.

Pros of Bridge Loans


Compared to long-term loans, bridge loans are typically easier to qualify for. Lenders understand your financing is short-term, and that a more permanent solution is in the works. It’s not uncommon for bridge loans to usually feature a faster application, approval, and funding process.

No Prepayment Penalties

Some business loans come with prepayment penalties. This usually isn’t the case for bridge loans. You’ll have the flexibility to repay your loan back early and save on interest when your cash flow improves.

Cons of Bridge Loans

High interest rates

Bridge loans tend to have high interest rates and fees. Still, most borrowers are willing to accept the extra costs since the loan is short-term.


In some cases, you may be expected to put up collateral in exchange for a bridge loan. This is especially true if you’re financing real estate or equipment.

Types of Bridge Loans

Bridge loans come in various shapes and sizes. What they all have in common is that they’re ideal for short term, fast financing.

Term loans

Term loans feature a specified funding amount and repayment schedule. Borrowers receive a lump sum of cash which they can repay over monthly installments or when and they receive a more permanent type of financing. Opt for term loans when you know exactly how much money you’ll need.

Business lines of credit

Business lines of credit are a more flexible financing solution. They feature a pre-approved credit line borrowers can draw from as needed. You can borrow up to your credit limit and only pay interest on what you’ve borrowed.

Businesses use lines of credit both as an emergency fund or to finance ongoing expenses. They make an excellent bridge loan because they’re flexible, convenient, and don’t require you to pay interest on money you don’t use.

Invoice financing

Invoice financing allows you to exchange your unpaid invoices for cash. It’s a fast, easy way to secure financing and you won’t have to worry about managing future payments. However, there are fees associated with invoice financing and you’re unlikely to receive the full value amount of your unpaid invoices.

Merchant cash advance

Merchant cash advances are popular among retailers who experience seasonal sales dips. They grant you funds upfront, which are then paid back over time via a small percentage of future sales. Repayment is based on your day-to-day sales rather than set monthly payments.

How to Get a Bridge Loan for Your Business

Businesses can find bridge loans at banks, credit unions, and online lenders. Banks and credit unions tend to offer lower interest rates, but they also have low approval rates.

Banks and credit unions maintain strict requirements: good credit (a score of 680 or above), at least 2 years of business history, strong revenue, supporting documents, and more. It’s also not uncommon for these lenders to insist on collateral. If you can’t meet these requirements, you may run into difficulties trying to secure financing.

Online lenders, or fintech lenders, are another option for bridge loans. These lenders offer fast approval and funding times, flexible requirements, and numerous financing solutions. In some cases, it’s even possible to secure funding with imperfect credit history.

Compare Business Bridge Loans

If you’re considering bridge loans for your small business, make sure to use National. National is an online marketplace that connects businesses with financing opportunities.

Our database consists of over 75 different lenders, each with tailored financing solutions based on your criteria. You can explore bridge loans, term loans, business lines of credit, SBA loans, invoice financing, and more. Our Business Financing Advisors offer expert advice at every step of the way, empowering you to select the best financing solution for your business.

Lenders within our network consider all aspects of your business when reviewing your application. We make sure to emphasize your potential for growth – rather than lock you into tight qualifications. And funding works fast – in as little as 24 hours.

Ready to get started? Fill out the 60-second application here.

Apply For a Bridge Loan