When to Use a Bridge Loan Instead of a Bank Loan
Today’s tough economy brings many challenges for small business owners. Keeping up with mortgage and operating costs can seem daunting, and pursuing growth opportunities might seem even more challenging when traditional lending is not an option. At Socotra Capital, we’re proud to serve as the premier commercial hard money lender for customers throughout California. We’re here to help small business owners when traditional bank loans simply can’t or don’t meet their needs and it’s time to look into a bridge loan.
Is a Bridge Loan or a Bank Loan the Right Choice?
Whether you need to pay off a mature note on your business property or cover a large COD so that you can restock your inventory, you need quick access to business funds. If you are experiencing issues with funding, you might be considering taking out a bank loan or refinancing a business mortgage. However, traditional lending institutions can’t always meet your needs, which means looking into a hard money loan is a great idea.
If you’ve been turned down by a traditional lender, you don’t need to feel hopeless. Hard money loans can be used by many business owners to meet enterprise obligations and encourage future success. Among the most commonly used hard money loans are bridge loans, which provide quick financing for business owners in need. You might consider using a bridge loan if:
- You are unable to refinance a business mortgage.
- Your regular lender is unwilling to work with you to meet short-term needs.
- Your business credit has suffered but you hold equity in property.
- You need to buy a property free and clear without waiting for traditional funding.
Understanding How Bridge Loans Work
Bridge loans are generally used by business owners who need to cover gaps between expenses and available capital. While the reasons for using bridge loans are many, the process of applying for and taking out these hard money loans is generally the same. Because they are a type of hard money financing, bridge loans aren’t offered by traditional lending institutions. Instead, they are offered by hard money lenders such as Socotra Capital.
One of the chief benefits of bridge loans is that they can be used to meet a wide variety of obligations. These types of hard money loans are free from the restrictions placed on financing by more traditional lending institutions. If you want to own a property free and clear or need to make significant improvements in a warehouse, a bridge loan can be used to meet your needs. When used wisely, bridge loans provide business owners with a fast, convenient way to meet today’s enterprise needs and build for tomorrow’s success.
Deciding if a Bridge Loan Can Meet Your Needs
Once you’ve identified crucial expenses and determined how much financing is needed to meet them, you’ll be able to weigh whether or not bridge loans are right for you. Weigh your need for financing against how repayment obligations will affect your business. It’s also important to remember that bridge loans are equity-based loans, meaning that your equity matters a great deal more than your credit score.
At Socotra Capital, we’re proud to provide competitive bridge loans to commercial customers throughout California. Whatever your short-term financing needs, we’re here to help.