Business bridge loans are like a stopgap for business finances. They offer short-term cash flow coverage for basic but essential expenses while you wait for additional funding. Whether it’s due to unpaid invoices, slow insurance claims or a simple cash crunch, understanding the basics of business bridge loans can help you meet your financial obligations on time without busting your budget.
All of these common uses for business bridge loans fall under the same category as working capital financing. As a small business owner, working capital is absolutely crucial to daily business operations and determines the short-term health of your finances.
Working capital is defined as the difference between a company’s current assets (like cash and accounts payable) and its current liabilities (like salaries, debt and pending bills). If the most pressing liabilities outweigh current assets, a business could be staring down the barrel of a cash shortfall. This could lead to a host of serious problems that put future operations in jeopardy.
However, many cash flow shortages are no fault of a business owner. Business bridge loans offer a solution to some common scenarios in which small-business owners might find themselves short on capital.
Bridge loan financing can help when there is a delay in receiving customer payments. Many times small businesses give their customers the benefit of the doubt when it comes to invoice due dates. But at the end of the day, you are relying on those payments to keep the lights on.
Using business bridge loans to cover expansion plans is another financial strategy. Every company needs to expand at some point, but growth requires capital. You’ll need more employees, more space and time. Even if your business renovating plans are sound, unexpected bills can disrupt your plans.
Many retails use business bridge loans to buy inventory. Mainly because buying inventory requires a lot of upfront costs to cover before your products are sold. This can be especially challenging for businesses that incur seasonality in their sales.
When a disaster strikes of any kind on your business that causes major damage, you might rely on an insurance policy to cover that loss. However, even the best insurance providers could take days to process a claim. In the meantime, bridge loan financing can be used to pay for expenses.
The uses highlighted and many more business situations make excellent candidates for business bridge loans. QuickBridge leaves no question about our specialty in this area – it’s in our name. With optimal bridge loan pricing for small businesses and a straightforward application process, QuickBridge is the solution for your most urgent working capital and cash flow needs.