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It’s been said so much at this point that it definitely falls under the category of a cliche: when it comes to having a successful business, the three most important things are — say it with me — “Location! Location! Location!”

True, ask any owner and they will tell you that where you set up shop can make all the difference in the world. The problem is, being able to move to your next perfect location isn’t always easy, especially when you’re already saddled with a property and a loan to pay off.

How can you get moved to a new area when your money is tied up making payments on your current one? Even if you’re looking to sell your old location, there’s no guarantee that you’ll get the timing just right so your business can easily transition from one to the other. Before you know, some hot new business is going to come along and snatch up your dream property! So, what’s the solution? A bridge loan.

What is a Bridge Loan?

As the name implies, bridge loans are loans set up to help you get over this problem. How do they do it? By providing you with short-term funding that allows you to purchase your new property without having to sell your old one first. It literally lets you bridge the gap between locations so you can move out of your old one and into your new one all at one time.

How Do These Loans work?

Bridge loans usually work by providing you with a large amount of money. Typically, a bridge loan will be sufficient so that you can pay off the loan on your old location as well as put a down payment on your new one. With these two sums in place, you can go ahead and move your business to its new location without having to worry about making multiple payments on both properties.

Once you get settled and your old location finally sells, the money from that sale goes to pay off the bridge loan. When it’s all said and done, your business is now established in a newer, better location, and the old place is someone else’s problem.

What are the Advantages of a Loan Like This?

Well, besides the obvious advantage of allowing you to move now, rather than later, bridge loans have several other advantages too:

They Give Flexibility

With bridge loans, you no longer have to deal with the stress of someone else’s timetable. Most of us have been in that situation where a property is under contract or has a bid — but problems just keep piling on, pushing back the sale indefinitely. With a bridge loan, you don’t have to worry about these impeding your move, as your loan comes through either way.

They Can Be Easier

Unlike regular property loans, bridge loans are subjected to far less when it comes to regulations. This means that they are often easier to get, with fewer qualifications.

They Are Faster

One of the best reasons to consider a bridge loan has to do with timing. When you find that perfect, “hot” property, the last thing you want to do is watch it go to someone else while you were waiting to secure a more traditional loan. Often, bridge loans can be secured in a simple matter of weeks, which means you are that much closer to getting that property before your competitors get their hands on it!

What Are the Disadvantages?

Of course, everything has good and bad sides, and you do need to know the risks of a bridge loan — typically, they come with higher interest rates and a shorter term for the loan. They are not meant to be your long-term lending solution. So, if you take a long time to secure your new location, or sell your old one, you could find yourself on the hook for a sizable chunk of money and some serious fees. This just means it’s important to read the fine print, know the terms and be confident you have the ability to pay back the loan should anything go awry.

As you can see, bridge loans can be a useful part of your toolset when it comes to finding new properties, expanding your business or investing. While they are not to be taken lightly, a bridge loan can help you and your business as your search for your perfect location.

Are you looking to get that hot property before the competition? Have you found the perfect location — and everyone else has found it, too? Talk to us today about building the bridge to your new investment!