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    Question

    Which of the following correctly defines a Bridge

    Loan?
    A Infrastructure loan Correct Answer Incorrect Answer
    B Microfinance loan Correct Answer Incorrect Answer
    C Convertible loan Correct Answer Incorrect Answer
    D Gap financing loan Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Bridge loan is a type of gap financing arrangement wherein the borrower can get access to short-term loans for meeting short-term liquidity requirements. It helps in bridging the gap between short-term cash requirements and long-term loans. It is typically prevalent in real estate and construction industry wherein a company may take a bridge loan till the long term funds are tied up for the project. These loans are normally extended for a period of 12 months at high rate of interest.

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