A bridge loan is short-term financing that covers a gap until a longer-term source of funds arrives. It is common in real estate — buying a property before selling another, or before permanent financing is in place — and in business, to bridge to a larger facility or a receivable.
How it works
Bridge loans are fast, short (often 6 to 24 months), and usually interest-only, priced higher than permanent financing in exchange for speed and flexibility. In real estate investing, a bridge or hard money loan lets an investor close quickly on a property and renovate it, then refinance into a DSCR or conventional loan (the take-out) once the value or income supports it.
When it makes sense
A bridge loan fits when speed matters and there is a clear, near-term exit — a sale, a refinance, or a lease-up. The key is having that exit lined up, since the loan is designed to be paid off, not held long term.