In corporate finance, a Bridge Loan is best described as

Solution

• A Bridge Loan (also known as gap financing or swing loan) is a short-term loan provided to borrowers to meet urgent liquidity requirements until they secure more permanent or long-term financing. • These loans are usually expensive due to their short tenure and higher risk, with interest rates much higher than conventional loans. • They are particularly common in the real estate and construction industry, where funds are needed quickly to start or continue projects until larger, long-term financing is finalized. • Typical tenure: up to 12 months. Thus, a Bridge Loan is essentially gap financing that “bridges” immediate funding needs with future long-term capital inflows.