What is a bridge loan?

In lending terms, a bridge loan is a short-term loan that is often used to support a project after one loan (such as a construction loan) ends and before the time when the development will be sold or permanent financing will be secured.

Bridge loans are interim financing. They cover the period from the end of one loan to the start of another.

In residential lending they are used when a borrower wants to buy a second home before selling a first home, and are sometimes called "swing loans".

Lead underwriters in initial public stock offerings (IPOs) may often provide a bridge loan to the company for needed working capital, secured by shares of the company’s stock.

Bridge lending for commercial real estate projects is often done by hard money funders.

Gala Resources makes bridge loans to real estate investors, builders and dealers.