Pros & Cons of Bridge Loans for Small Businesses

At a certain point, you might need to start spending more money on your business in order to make money in your business. But acquiring the capital for your growth plans can be difficult. With daily operating costs and other expenses, you need to find a new source of income or financing.

Borrowing money is nothing new in the world of business. Many do this to start an entrepreneurial career, while others do so to fund their expansion. No matter why you decide to take out a loan, you have to choose it carefully.

Bridging the Gap between Financing & Business Growth

Many financing solutions have become available to business owners recently. One of them is the bridge loan. But what is a bridge loan?

A bridge loan is a short-term loan that provides quick funding while you look for a more permanent solution. Business owners use it to handle an existing obligation and reduce their obstacles in the long run. It’s becoming common among small businesses, but before you take out a bridge loan, it’s essential to study its benefits and terms.

Here are the advantages and disadvantages of a bridge loan.

Benefits of a Bridge Loan:

Bridge Loans are a fast way to get funding for your immediate needs.

The whole process—application, approval, and funding—is faster than most other types of loans because our bridge loans have fewer requirements. This gives you the capital to purchase new or additional equipment, pay for inventory, or meet your payroll needs without affecting your bottom line.

Bridge Loans give you full control over your business.

For most loans, you have to sign over a portion of your business as collateral. But a bridge loan from Probably may only last a year, meaning you can quickly pay it back without having to relinquish control over your business.

Bridge Loans give you a safety net for other expenses.

As a small business, you are often at risk of running out of cash. Our bridge loans give you access to money that can be used to cover pertinent expenses. It’s a practical and valuable solution for businesses that have long payment cycles.

Potential Cons of a Bridge Loan:

It might have larger payments.

Since a bridge loan runs for a shorter period, you might be charged more during monthly repayments if you don’t choose a good company to work with, and understand their terms. Late payments will be met with penalties and higher interest rates as well. Make sure you work with someone trusted and transparent, like Probably, to ensure you get the best deal!

It could be risky for your short-term bottom line.

Business owners who take out a bridge loan while waiting on an extended payment cycle are at risk of failing to see that long-term money at the end. And when payments fall through, you will have to make your loan payments out of pocket. This is the risk with any loan, but is still worth mentioning. As always, only borrow what you expect to be able to pay back.

Work with Probably for a Trusted, Transparent Bridge Loan

Probably is dedicated to helping small business owners transform their start-ups into strong and sustainable organizations. Our bridge loans are customized to each client, giving them what they need without causing disruptions in their operations and cash flow.

If you need additional capital for your business, consider applying for a bridge loan from Probably today!

What Are Bridge Loans?

A bridge loan is defined as a short-term loan used by a business for financing immediate obligations or needs. These loans allow the borrower to meet their current financial obligations by getting capital quickly for payroll, taxes, rent, even additional inventory.

Bridge loans are called ‘short-term’ because they are usually only up to a year. These types of loans can sometimes be called working capital loans or bridge financing. But whatever you call them – they are one of Probably’s specialties!

How Do Bridge Loans Work?

Bridge loans bridge a financial gap when financing or working capital is needed for your business but not yet available. Both large corporations and small businesses can use bridge loans, which means that your particular loan should be customized for your needs, amount, and situation.

Bridge loans are fast options and can provide immediate working capital, but this can come with higher interest sometimes and may require collateral. This is why it is important to get terms that benefit you, work with a transparent lender, and make sure you understand the process and repayment details.

Luckily, that’s what Probably is known for – transparency, clarity, and communication!

Differences Between Bridge Loans & Traditional Loans

Bridge LoansTraditional Loans
Shorter applicationLonger application
Faster approvalSlower approval
Short-term fundingLonger-term funding
Sometimes higher interest ratesSometimes lower interest rates
No repayment penaltiesMay have repayment penalties

Bridge Loans for Your Small Business

Bridge loans are not like payday loans or other ‘get funding fast’ options for individuals, instead, they help a business make more money, grow, or become more successful.

For example, if a small business gets a large order, then they will need to buy extra inventory, products, or parts to fill that order. And though they have not been paid for the order they are about to make, they still need the working capital to buy the items to fill the order. That kind of circular funding problem happens quite often for small businesses, and a bridge loan is the perfect, short-term solution!

Bridge loans can also be used for short-term payroll, rent, utilities, and other expenses that will help your business in the long run, or ‘hold you over’ until you can secure longer-term financing.

Our Bridge Loan Uses:

Help with Payroll

When you need working capital for payroll, speed, and ease matter. Your employees depend on you and your payroll, and you can depend on Probably to get you the working capital you need quickly with our bridge loans.

Invest in New or Supplementary Equipment

Buying new equipment (or more equipment for added demand) can be a big investment, but sometimes you need to spend money to make money. If you need a bridge loan to invest in equipment that will help your business thrive, we’ve got you covered – fast.

Pay Taxes or Infrequent Financial Obligations

Sometimes financial obligations and fees pop up when you least expect them, and sometimes taxes or quarterlies add up faster than you planned on. Use our small business bridge loans to pay for the surprises on your road to success.

Purchase Additional Inventory for Spikes or Large Orders

Additional inventory might be needed when you don’t quite have the capital on-hand for a big order or a heightened demand. Use a working capital or bridge loan to bridge the gap and get your inventory so you can keep your business moving forward!

Invest in Your Marketing Services

Marketing, whether in print, online, radio, or on TV, can be expensive. If your marketing efforts need to be bumped up during certain times of the year, then you’ll need a short time influx of working capital to set you up for great ROI. Have the capital you need for a killer campaign with our bridge loans!

General Help with Cash Flow

If this year has shown us anything, it’s that small businesses have slow and busy periods that they may have no control over, but that doesn’t mean your bills have slow and busy periods – they steadily keep coming! Use our bridge loan to help with your cash flow at any time of the year, until you can bounce back or secure longer-term financing.

Contact Probably Yes to Learn More About Your Bridge Loan Solution!

Learn more about us, how we work, or peruse our blog page for more information about working capital and bridge loans, business funding for startups, and more!