Bridge Loan

In finance, the terms bridge loan and bridge financing refer to short-term loans used to finance endeavors after long-term loans have expired and before subsequent long-term loans are granted.

Typically, the requirements for accessing bridge loans are less stringent than those required to get long-term loans. Bridge loans are normally more expensive than long-term loans.

In Switzerland, home loans obtained through variable mortgages (adjustable rate mortgages) are often used as bridge loans to fill time gaps between two cheaper fixed rate mortgages.

Bridge loans are also commonly in business lending. Companies may use bridge loans to maintain liquidity until they are able to secure long-term financing. The liquidity provided by business credit cards and business current accounts could be considered a bridge loan because it provides easy-to-access financing, but at a relatively high interest cost.

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