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There may be any number of reasons why a business may require a business bridge loan. For example, they may be looking to expand, or the business may have suffered some damage and money is needed to keep the business running until the insurance payments come through, however the most common reasons why small businesses require a business bridge loan is because customers are slow to pay and the business needs working capital in order to buy inventory or pay their employees to keep the business running until the accounts receivable are paid. Luckily, Bridge loans are granted with bad credit providing the earnings of the business match up. To reiterate, this unsecured loan with allow your business to boom and go to the next level regardless of your personal payment or credit history
What is A Business Bridge Loan:
A business bridge loan is a small loan that a lender provides a business that is having a temporary cash flow problem. It is typically covers basic essential expenses while the business is either waiting for additional funding or until the temporary cash flow problems is resolved.
Bridge loans for businesses payback terms usually last from anywhere from a few weeks to 12 months. These loans also tend to have have interest rates and other fees than more traditional bank loans due to the fact that these type of loans normally create higher higher risk to the lender. Businesses unusually get faster funding than long term conventional loans with the money available sometimes in less than week. The speed of the loan's approval is due to the fact that these loans normally have less paperwork and credit requirements that long term loans. A Business bridge loan may be secured or unsecured.
Most traditional banks do not do business bridge loans so businesses must seek financing for this type of loan from a non-traditional revenue based cash flow loan company also known in today's financial market as a "merchant cash advance" company.
Advantages of Business Bridge Loans:
There are some advantages to business bridge loans for small business these advantages include:
· Application Process is Simple and Easy- Applying for a business bridge loan usually requires less time and less paper works that many other types of loans do.
· Funds Become Available Quickly- The funds for this type of loan often become available for the business quickly. In most cases the business receives the money within days of the loans approval.
· Flexible Loan Terms- Many times business bridge loans have flexible loan terms, which means the lender may be willing to work with you on the terms under which you receive the loan.
· The Loan is Short Term- Since the loan is short term businesses are under the obligation of long term loans payments, but are usually out of debt for this loan within weeks or months instead of years.
Downside of Business Bridge Loans:
There are a couple of negatives of taking out a business bridge loan which should be considered by anyone thinking of applying for one of these loans.
· The Loan is Short Term- While the fact that this type of loan is of short term which can be a benefit it can also be a negative since if your financial problem isn't resolved quickly or additional funding is slow coming through making the payments can be difficult.
· The higher interest rates and fees may make repayment difficult and even if making the payments are easy and simple the high fees may cut into your businesses profits.
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