As your business grows, your staff and equipment increase as well. When this occurs, a new building that can fit your expansion becomes a necessity. However, you might still own the property you are currently in and that can cause an issue trying to find financing when the right space becomes available. Here are a few reasons why you should consider a bridge loan in this situation.

Why You Would Get This Financing

You will find these loans when you are working in the field of real estate. If you are ready to move into a new facility but have yet to sell the current property you are in, you would need to apply for bridge loans. This small term loan, which lasts only a few months, would allow you to purchase your new building while the former one is on the market. As soon as the previous structure is sold, you can use the money you receive to pay off the money you borrowed and satisfy your lender.

Partnering With an Equity Firm

One option to get this type of financing is to work with an equity firm to get the cash you must have to purchase your facility. To get these bridge loans, you would give a percentage of your company to the group that you work with in exchange for the financing that you need. You can also form a partnership with them instead of offering a portion of your company. You would share the business with them. They would provide the money that you need to buy your building and you would give the corporation the skills required to operate it. The profit that is made would be split evenly between the two entities. 

Working With a Lender

The standard method to apply for this loan is through your lender. They will consider your credit, the finances of your company, and the cost of the properties involved before they decide to lend to you. The interest rate on bridge loans is much higher than a standard loan. You will want to consider this as you plan your budget. You also have the option of a hard money loan. The cash from this comes from a private investor who will determine how much the facility you want to borrow against is worth. If they feel that it is worthwhile collateral, they will provide you with the amount you must have to purchase it.