Bridge financing can be described as the short term financial solution that a company can adopt so as to be able to take care of the financial aspects that they are engaged with before they are in a position to get a long time solution for their financial situation.
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.When a company is in need of bridge financing it means that the finance solution that they will get from a financial institution ought to be able to sustain the company’s needs until the time that the company will be in a position to be able rise and be on its feet.
One of the common instances that is mostly observed when companies take bridge financing is for example when they do not have enough capital to finance the business for as certain period of time and have to get assistance of a financial institution to offer financial solution when in a position to reap profit at the end.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.
It is highly recommended that companies that are taking up bridge loans to have great financial plans as the it could cause a strain in the company due to the high interest charges that are subjected to the loan.
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.
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