Bridge Loans

Companies in need of short-term financing for as little as 30 days up to a period of two to three years (and occasionally up to five years) may qualify for bridge loans. These are typically structured as interest-only loans (with the balance due at maturity) or interest plus an appropriate amortization period. A wide variety of types of projects will potentially qualify, and loan amounts can start at $1 million and can go as high as $20 million (up to $100 million in select situations).

Bridge loans are not meant to be a final solution for the borrower. Rather, they are meant to be short-term or intermediate funding. In most cases the borrower will need to seek replacement financing at the end of the term to extinguish the original amount borrowed (the principal). That is, bridge loans are dependent on an outside event to pay off the loan -- the expectation is that at least part of the principal is going to be repaid from a refinancing or sale.

To qualify for bridge loans, companies will need to provide the following:

• Appropriate tangible collateral
• Legitimate repayment strategy
• Demonstrated ability to service the debt
• Suitable use of proceeds
• Proper supporting documentation

Payment scenarios will vary depending on the borrower's (and lender's) specific needs and requirements. Some projects will qualify for an interest-only structure, while others will require a standard principal amortization schedule. Some loans may also require an interest reserve.