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Bridge Loan

Definition - What does Bridge Loan mean?

A bridge loan is a loan that is designed to provide short-term financing until a longer term loan can be secured. In the context of the law, bridge loans can be used to prevent a company from going into default, or becoming bankrupt while it is seeking longer term funding to maintain business operations.

Justipedia explains Bridge Loan

Because bridge loans are typically short term, they usually carry higher interest rates than longer term loans. As the name implies, bridge loans are there to help a party bridge the financial gap until a better source of financing can be provided. This type of loan can be critical for startups that need cash to operate with but whose profits will not be able to support the company until a future date. In these circumstances, bridge loans can save the company where it may otherwise fail.

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