One can define bridge financing as the temporary financing solution that an a particular organization can adopt so as to sustain their financial needs temporarily before they can be in a position to get a long term solution for their financial status in the organization.
Incase an organization is in need of a short term financial assistance before they settle for a long term financial solution there are several organizations that one can contact for the financial solution and some of these institutions include venture capital companies and also investment banks.
When an organization gets into an agreement with a financial institution when they are in need of a short term financial assistance so as to cater for the organizations needs the money that will be handed over to the organization will either be a loan and some instances an equity investment. Bridge financing that is offered to a particular organization when they are in need of a short term financial solution should be able to cater for the company’s needs until when the company will be at ease and thereafter can make long term financial solutions after they are able to stand on their feet.
There are several instances companies decide to have bridge financing and one of the instances is when the company doesn’t have enough capital to kick start the project and have to adopt a short term financial solution from a financial institution with vision of having profit after the venture.There are various forms of bridge financing that is given to a company by a financial institution when they are in need of a short term financial solution and one of bridge financing option is the bridge loan which is given out to an organization at an interest that are high.
Organization that are arranging for a bridge loan are always advised to have a well-established financial plan as the interest that they are charged for the bridge loan are in most cases high and could cause a strain in the business.
Equity bridge financing is the other option that a company can adopt when they are choosing an option for their short term financial solution when it comes to bridge financing where a company chooses not to have debt at high interest that is mostly subjected in bridge loans. When a company is in need of the equity bridge financing the company will then contact venture capital institution so as they can be able to provide the company with the capital that they are in need of and this is achieved by the company selling part of its equity ownership to the venture capital institution.
There are numerous information that one can also acquire from the website about bridge financing as this site provide more information on bridge financing.