Is a Bridge Loan right for you?

Earlier we discussed how a Hard Money Loan works and under what circumstances someone would request this type of loan. Because Hard Money Loans are similar to Bridge Loans, it seems appropriate to now discuss the latter of the two.

Like a Hard Money Loan, a Bridge Loan is a short term loan that can be very beneficial if you or your company need money right away. Rather than possibly waiting months to finalize a loan through the bank, Bridge Loans can be much easier to obtain. Interest rates are usually anywhere between 12 to 15 percent, with payments lasting up to 12 months.

Bridge Loans are commonly used as intermediate loans to keep a business running while it waits for a more major form of financing. Rather than allowing your company to slow its production while waiting for funds, you could receive a Bridge Loan to continue operating everything smoothly. They “bridge” the short term gap between a company’s funding sources.

Bridge Loans are also commonly used in real estate. When selling a house and buying another, Bridge Loans can be used to cover the costs until the old house is sold. Or, if you already have a good amount of funding for a property you are purchasing, but don’t have quite enough, a Bridge Loan will provide you with the last bit of funding that you need.

Find out if a Bridge Loan is right for you.

Business Acquisition

It is common to hear about businesses who work in the same field acquiring one another, as it can be beneficial for both companies involved. Imagine that your beloved childhood restaurant owner is about to retire, and you don’t want to see this company close down. Buying the restaurant will keep the town’s favorite eatery in business while giving you the opportunity to generate profit. Acquiring businesses is a common business transaction in the world today, think Nextel and Sprint.

Consider, for another example, that your business has one competitor in the area whose company is less successful than your own. Suppose the rival company serves one third of the community, while yours serves the other two thirds. By acquiring the rival, your company gains whatever strengths that caused the one third of the community to use their business instead of yours. Your company’s previous strengths are now backed by the strengths of the company you’ve acquired, and you will receive more business.

There is also the case where a start up business will purchase an already existing firm. Rather than building a brand new company from the ground up, many entrepreneurs will avoid the struggles of starting a new business by acquiring another. Instead of finding customers and employees as new businesses must, you can build off an already established company.

How have your experiences been with business acquisition?