3 Reasons Your Small Business Needs a Commercial Bridge Loan
There are lots of sources of financing available for businesses. These financing opportunities usually have different purposes and it’s up to businesses to know when to use different sources. One effective source of financing for businesses is the commercial bridge loan, which is used to bridge the gap between what cash flow a business has available and what cash flow is needed in certain scenarios. Here are three reasons your business may need a commercial bridge loan.
Take Advantage of a Time-Sensitive Opportunity
Some opportunities are time-sensitive. For example, there may be a piece of real estate that would benefit your business, but it’s only going to be available during a short window of time. If you don’t have the cash flow available to take advantage of that opportunity, you could miss out on what could be useful for your business’s long-term strategy. A commercial bridge loan provides you with the short-term funding needed to take advantage of the opportunity and then repay the loan. That way, you don’t have to rearrange your business budget to make it work and can still get the benefits of the opportunity.
Make a Balloon Payment
Sometimes the timing of a payment, such as balloon payment, doesn’t line up very well with your business’s finances. This can be due to many reasons. When that happens, a commercial bridge loan can give you the immediate cash needed to make the payment. That way, you can meet your financial obligations and keep up with your debts without causing problems to your credit or the financial operations of your business.
Strengthen Short-Term Financial Stability
Another reason a commercial bridge loan can be beneficial is to stabilize your business in the short-term. For example, if you’ve released a new product but it hasn’t been successful yet, you may find your business short on cash flow. A commercial bridge loan can help you do what you need to for the business until sales of the new product pick up. That keeps you from having to make big sacrifices in other areas and still being able to meet your operating expenses.