BRIDGE LOAN Meaning and
Definition
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A bridge loan is a short-term financial loan that is used to bridge a gap between two transactions. It acts as a temporary source of funding in situations where immediate cash flow is required but is not readily available. Typically, bridge loans are offered for a period ranging from a few weeks to a year, although the specific terms can vary depending on the lender and borrower's agreement.
Bridge loans are commonly used in real estate transactions, particularly when there is a time gap between the sale of one property and the purchase of another. In such cases, the bridge loan helps the borrower secure financing for the new property while waiting for the funds from the sale of the existing property to become available. This type of loan is also utilized by businesses in need of immediate funds to cover expenses or take advantage of time-bound opportunities.
The terms and conditions of bridge loans often involve relatively high interest rates and fees due to the short-term nature and the potentially higher risk involved in such transactions. Lenders may require collateral or a personal guarantee, depending on the borrower's creditworthiness and the amount being borrowed.
In summary, a bridge loan is a temporary loan that provides immediate funding to bridge the gap between two transactions. It is commonly used in real estate or business settings and is typically repaid once long-term financing becomes available.
Common Misspellings for BRIDGE LOAN
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Etymology of BRIDGE LOAN
The word "bridge loan" is a combination of the words "bridge" and "loan", each with its own etymology.
1. Bridge: The word "bridge" comes from the Old English word "brycg", which has various Germanic origins. It is derived from the Proto-Germanic word "brugjo", meaning "a crossing" or "a bridge". The term has been used since ancient times to describe a structure built to cross over an obstacle, such as a river or a chasm. It metaphorically represents a connection or link between two points or situations.
2. Loan: The word "loan" comes from the Old Norse word "lán" or the Old English word "lǣn", both related to the Proto-Germanic word "*launiz". It originally referred to the act of lending something or the use of borrowed property.
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