Many types of asset-based lending are popular for real estate transactions. They include bridge loans. ABL financing offers considerable speed and simplified approval, which is a win-win prospect for real estate companies that want to close on properties as quickly as possible. Can a bridge loan help other types of businesses?

When Are Bridge Loans a Good Choice for Businesses?

ABL financing can be an excellent help for virtually any type of business. The thing you need to remember is that bridge loans are for short-term needs only. They have shorter terms for repayment compared to conventional loans. Instead of having 10–25 years to pay back the funds, you generally need to take care of ABL loans in a year or two.

Real estate companies get around this obstacle by using property sales to cover the cost of financing. For example, they apply for a bridge loan, purchase the property, improve it and sell it for a profit. With the money generated from the sale, they can easily cover the bridge loan.

Things are somewhat different for retail stores and other conventional traditional businesses. If you make your living selling products, you need to use financing for things that help you generate profits, too.

A remodeling project can be important, but it doesn’t help you get the funds to pay off your bridge loan quickly. On the other hand, using ABL financing for inventory purchases is smart because the products you sell directly help you pay off financing and make profits at the same time.

What Businesses Use Bridge Financing?

Countless companies of every size turn to ABL financing regularly. Retail stores, sales businesses, and B2B companies rely on this type of loan to improve available capital and purchase inventory with greater flexibility.

Healthcare businesses and corporations often use bridge loans to smooth out cash flow problems. Restaurants and transportation companies have similar needs.

Construction businesses can benefit from bridge financing when purchasing materials. With flexible funding, it’s easier to pay employees and subcontractors to get the project done on time.

How Can You Use Bridge Loans as Gap Funding?

Outside of real estate, a common way to put bridge funding to good use is to cover a company’s financial needs in critical moments. For example, slow cash flow can leave you without capital right when you need it most. A bridge loan can help you get funds immediately, and then you pay off the loan once your clients pay you.