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What Is a Business Bridge Loan?
A business bridge loan is a versatile short-term financing tool used to help small business owners and large companies cover urgent expenses until longer-term funding or revenue can fill the void.
Unlike SBA loans or conventional bank financing, which can take weeks, if not months, to fund, bridge loans are known for their quick funding, flexible terms, and easy accessibility.
Entrepreneurs and business owners who need quick access to capital often turn to these loans for economic relief or to make a purchase or acquisition.
When to Use a Business Bridge Loan
Business bridge loans are most commonly used when timing is critical.
If your company is facing a temporary cash crunch or you have identified a business to take over or to roll up into your existing operation, a business bridge loan could be an ideal solution for you.
Bridge Loan for Business Acquisition
- Avoid losing out on an attractive deal: Act faster than competitors when a lucrative opportunity arises.
- Submit a strong bid: Offers using bridge loans are all-cash, appealing to sellers since SBA or bank approval is not necessary. Funding is therefore not delayed or denied.
- Seamless transition: Cover the acquisition with a business bridge loan until permanent long-term financing is obtained.
Bridge Loans for Small Business Working Capital
- Operating expenses: Cover fixed costs such as payroll, rent, inventory, and utilities with no downtime.
- Initiate growth: Increase budget for marketing campaigns, new employees, or seasonal inventory needs.
- Buy in bulk: Purchase a higher volume of inventory at a discount.
- Bridge funding gaps: Keep your business operational while pending accounts receivable and other payments are finalized.
Bridging Loans for Business Expansion Opportunities
- Prime real estate: Acquire prime commercial real estate on short notice.
- Access to capital: Tap into the equity in your property to facilitate other business opportunities.
- Open new locations quickly without waiting months for bank financing approval.
How Business Bridge Loans Work
Pre-Approval Process
Contact a bridge lender and provide basic information about your property and your business’s financial situation. Usually, within 5 to 10 minutes, you will be pre-approved or denied.
Value of the Asset
The value will be determined using an appraisal, a broker’s price opinion (BPO), or recent comparable sales, taking into account the property’s current condition, occupancy rates, and long-term rental contracts.
Terms
Bridge loans for businesses usually involve interest-only payments, with a typical loan duration of 6 to 24 months.
Loan extensions might be possible, so ask before agreeing to the deal.
Closing
After approval, funds are released to escrow and then disbursed to the borrower according to the agreed-upon terms, a process that typically takes only a few days.
Exit Strategy
Lenders want to know how the loan will be repaid before funding it.
Common repayment methods include selling the property, refinancing, or paying off the debt with cash flow from the business.
SBA vs Bridge Loans
SBA loans are perhaps the most well-known financing option for buying a business. However, they are rarely used in practice due to their lengthy approval process, extensive paperwork, and the requirement for personal guarantees, which can be very risky.
Business bridge loans, conversely, are much more straightforward and easier to fund.
SBA Loans
1 to 3 months, or longer
Requires strong personal & business credit
Usually required, but flexible
10% to 20%
Low to moderate (5% to 9%)
5 to 25 years
Comprehensive: tax returns, bank statements, business strategy, etc.
Moderate
Buying a business, equipment, or expansions
Bridge Loans
1 to 3 days
Less critical, more focused on collateral
Property or business assets
25% to 40%
Moderate to higher (8% to 15%)
6 to 24 months
Minimal: appraisal, basic info, purchase contract, and exit strategy, etc.
High, great for unconventional deals
Quick property or business acquisitions
Fast Business Bridge Loans in California
Crescent Lenders are top-rated California bridge lenders, providing fast, flexible funding to businesses across the state.
Whether you’re financing a residential fix-and-flip in San Diego or purchasing commercial property for your business in Los Angeles, we have the expertise and capital to make it happen.
With over 150 million in bridge loans funded and over 2 decades of experience, we know how to deliver when big banks don't.
We move fast on business bridge loans in California when banks don’t!