Common questions about bridge financing and mezzanine financing.
What is bridge financing?
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Bridge financing is short-term debt used to bridge a timing gap between an immediate capital need and a future liquidity event or permanent financing. Common uses include bridging to a property sale, an equity raise, a pending loan approval, or a seasonal cash flow peak. Bridge loans are typically 3–24 months in term, fast to arrange, and structured around the specific exit event being financed.
What is the difference between bridge financing and mezzanine financing?
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Bridge financing is short-term, secured debt that fills a temporary capital gap. Mezzanine financing is a hybrid of debt and equity — typically subordinated debt with an equity kicker (warrants or a conversion right) used to fill the gap between senior debt and equity in a capital stack. Mezzanine is more expensive than bridge debt but does not require immediate repayment — it is designed for 3–7 year holds in growth or acquisition scenarios.
How fast can bridge financing be arranged ?
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Alliance can arrange bridge financing decisions within 48–72 hours and fund within 5–10 business days for well-documented transactions. This compares to 4–8 weeks for conventional bank financing. Speed is the primary advantage of bridge lending — it is priced at a premium specifically because of the rapid execution timeline.
What are typical bridge financing rates ?
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Bridge financing typically carries interest rates of 8–18% per annum depending on loan-to-value, borrower profile, exit certainty, and collateral type. Some lenders charge a lender fee of 1–2% of the loan amount in addition to interest. Total cost must be weighed against the opportunity cost of the gap being bridged — in many cases the cost of not having the capital exceeds the cost of the bridge.
What collateral is accepted for bridge financing?
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Bridge lenders accept a range of collateral: commercial real estate (most common), business assets (equipment, inventory, A/R), equity interests, insurance proceeds, and expected sale proceeds. Some bridge lenders will take a personal guarantee without hard collateral for smaller transactions. Alliance works with lenders that specialize in each collateral type — we match the collateral to the right lender.
Can I get bridge financing with poor credit?
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Yes, in many cases. Bridge lenders focus primarily on the value of the collateral and clarity of the exit event, not the borrower’s credit history. A clear, credible exit (a signed purchase and sale agreement, a committed equity round, a pending refinance approval) often matters more than credit score. Alliance has arranged bridge financing for businesses in credit distress, insolvency proceedings, and creditor forbearance.
What is an exit strategy and why does it matter for bridge financing?
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An exit strategy is the specific event through which the bridge loan will be repaid — for example, the sale of a property, completion of an equity raise, or approval of permanent bank financing. Bridge lenders underwrite the exit first. The clearer and more certain the exit, the better the rate and terms. Weak or speculative exits result in higher rates, more collateral requirements, or outright decline.
What is the minimum and maximum bridge loan size ?
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Through Alliance’s lender network, bridge loans are available from $100,000 to $25,000,000+. Smaller deals ($100K–$500K) are typically unsecured or lightly secured with fast decisions. Larger facilities ($1M+) require more structured collateral and diligence but are available through Alliance’s institutional bridge lending partners.
How is bridge financing repaid?
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Most bridge loans are repaid in a single bullet payment at maturity — the full principal plus accrued interest is paid when the exit event occurs. Some structures allow for interest-only monthly payments with the principal due at term. Unlike amortizing loans, bridge loans are not designed for regular principal reduction — they are designed to be retired quickly through the exit event.
