The mining company Ur-Energy announced recently that it had secured a $5 million bridge loan to help it begin a new project. The concept might seem complicated to the novice, but the company will use the bridge loan to pay for the initial work on a $34 million project. Once the facility is nearing completion, the company can take out a longer-term loan and pay off the initial bridge loan.
The story serves to underline the fact that the real estate market is hot again. More and more, people and companies are using bridge loans to make quick purchases or to start work on projects with the intention of getting longer-term funding later.
Basically bridge loans are short-term loans that last anywhere from two weeks to a couple years. Interest rates may be higher than traditional lending, but documentation is low and turnaround time for Bankers South bridge loans is lightening fast.
In the Sunshine State, contractors and builders have been using Florida bridge loans for years. Once the plan is fully entitled, the developer can use a longer-term loan to pay off the bridge loan.
Businesses with multiple partners also use bridge loans when one of the equity partners wants to leave. The rest of the partners can take out a bridge loan to buy out the partner who’s leaving. Then the firm can pay off the bridge loan when a new partner buys in.
If you’re interested in learning more about bridge lending, call us here at Bankers South, where we can work together to see if it’s right for your needs.