what is a bridge loan

A bridge loan is a type of short-term loan that is typically taken out for a period of 2 weeks to 3 years, pending the arrangement of larger or longer-term financing. It is often used to bridge the gap between buying a new home and selling a previous one, or to provide interim financing for an individual or business until permanent financing is obtained. Bridge loans are commonly used in real estate transactions and can be more expensive than conventional financing, with higher interest rates, points, and other costs. They are designed to provide immediate cash flow and are usually backed by some form of collateral, such as real estate or the inventory of a business