You've heard the term. But you aren't sure whether or not a bridge loan is right for your small business.
What is a bridge loan and how does it work?
Bridge loans have increased in popularity in recent years. They are a way for businesses to overcome short-term cash flow challenges or gain access to immediate cash when long-term funds aren't yet available.
Let's take a look at 10 reasons to get a small business bridge loan.
1. Short-Term and Low Risk
Since a bridge loan is intended to "bridge" your business across a small amount of time, it's easier to get.
A long-term loan can take significant time for approval. By the time your application is approved, you're left without the cash or funding you need.
A bridge loan is fast-acting. The borrowed amounts are often lower than a long-term loan and more often approved. The repayment deadline is usually shorter too, from a few weeks to up to 12 months.
If your business and finances are in good standing, it's possible to have approval for a bridge loan on the same business day.
The short terms lower the risk for you and your business.
2. Quick Cash-Flow
Every business experiences ups and downs. Whether it's slow product sales or a slow season for your services, the lulls in your business affect cash flow.
But there's no need to close your doors or give up on your small business during a rough season. Think of the bigger picture.
Business bridge loans are there to infuse quick capital into your business to get you through a tough few months or a year.
With quick approval and almost instant cash, you'll have what you need to get through a rainy day.
3. Save Jobs
Regular payroll is critical to keeping good employees and providing jobs. Hanging on to those valuable roofers or skilled plumbers is important to your business.
There's no need to lay off employees during a short-term dry spell for your business. You need those good employees to continue running your remodeling or construction business.
Bridge loans provide cash to keep your payroll funded until your business income turns around.
4. Expand Your Business
Maybe your business is booming and it's time to grow.
Apply for a bridge loan for recruiting or equipment capital. Set yourself up for more success, a larger business, and a growing workforce to support your expansion.
Use short-term borrowed cash to get to the next level.
5. Fund a Construction Gap
Bridge loans are also used to help with a piece of a larger project. This may involve the construction of a new or remodeled facility for your business offices, equipment storage, or supply storage.
If you have some but not all of the funding you need, add a bridge loan to the mix.
The additional short-term loan "bridges" the gap in funding to complete your full construction project.
6. Build Your Supplies
When operating a plumbing or painting business, you need supplies on-hand. Customers leave when projects take too long.
If your capital is running low to keep projects moving, apply for a bridge loan to build your supply availability.
Your sales income will help repay the quick loan and get your business on the way.
7. Cover Utilities
If your biggest short-term pain is keeping the lights on, use bridge loan funds to pay utilities.
Operating expenses are not the fun part of building your dream business. But they're necessary.
If the choice is between paying your employees or paying the water bill, don't make a choice. Do both with the help of a bridge loan.
8. Buy Another Business
Sometimes, an opportunity is too good to pass up. Not having the cash on hand when the moment arrives is frustrating and bad for business.
Maybe your business is thriving and you have the opportunity to buy out a competitor. Or you have an opportunity to add a piece to your business that compliments what you do.
When you run a building or remodeling business, you depend on parts and pieces from suppliers.
But you could remodel more homes and save money if you own some of the suppliers.
Buying a piece of the supply chain to increase your management of the process is a great use of bridge loan funds.
9. Growth and Inventory
Bridge loans are often used by contractors who are ready for growth or need extra inventory. You want the best for your business, your employees, and your future. Doing everything it takes is often the cost of success.
Having a shortage of inventory can hinder business operations and sometimes borrowing from one job to buy inventory for the other. Contractors will apply for a bridge loan to save the hardship of juggling funds.
A Bridge Loan Benefits Your Business
No matter your type of business, a bridge loan is a benefit worth considering when funds are low or when it's time for growth.
Your passion for what you do is important. Never let money stand in the way of your business success.
When choosing from bridge loan lenders, look for someone who understands your business and supports your success. Your lender's reputation is as critical as yours.
Choose a trustworthy and knowledgeable partner to help you secure the best bridge loan for your needs.
Express Capital Funding works hard to understand your business needs and provide quick capital solutions.
Contact us and we'll get started on your loan process to get you on the way to success!