First Down Funding is a company that offers bridge funding and other small business funding services to small to medium-sized businesses in the U.S. First Down Funding partners with you to help you navigate funding solutions to support your business growth by securing business funding approvals.
If you are thinking about bridge funding, picture this: your small business has just gotten approved for a loan that allowed you to secure an upscale brick-and-mortar location. This building has plenty of room for all your company’s supplies and employees to do their jobs comfortably. However, this big loan is split into tranches so that you won’t see any money for a few months.
In the meantime, how are you supposed to pay for the new building’s utilities or compensate your employees? Bridge funding can give your company an immediate stream of funds to keep you afloat.
What Is Bridge Funding?
As its name implies, bridge loans are used to “bridge the gap” for a small business between other financial obligations. Bridge funding is known by several different names, such as:
- Gap funding
- Gap financing
- Working capital loans
- Swing loans
- Bridge capital funding
These loans put money into the hands of small business owners immediately to cover short-term costs. Bridge loans are often essential for covering short-term expenses like buying materials, maintaining payroll, and other everyday operations. Gap financing can also help company owners pay down debts from various lenders and suppliers while keeping a steady working capital.
Even if you have a balanced working capital and a steady cash flow already, sometimes the unpredictable happens. For example, a piece of important equipment might need repairs, or the workplace might be damaged in a flood or fire. Unfortunately, you might not have insurance for these incidents and can’t take out a new loan until another is settled.
You could use your company’s hard-earned money for these repairs, but it might hurt your working capital. This could cause you to fall behind on rent or utilities and accrue late fees on other loan payments. Rather than take that risk, the smarter decision is to seek out bridge financing.
Bridge Financing is ideal for:
- Small Businesses
- Short Term Loans
- Immediate Cash Flow
- Companies with No Collateral
How Does Bridge Financing Work?
Bridge loans often have shorter terms than a regular loan, typically up to one year. Before your company gets approved for the loan, the lender will check your credit history and background. Fortunately, it’s easy for a small business to get a swing loan even with a bad credit score.
Approval for bridge loans is also relatively fast compared to regular business loans. A long-term business loan may cover larger expenses like hiring more employees, but waiting for approval wastes valuable time. If you only need short-term expenses covered, a bridge loan should suit your company’s needs.
Before you apply, here are some things to consider:
- Minimum and Maximum Loan Amounts: Personalized to Each Application (up to $300,000)
- Average Approval Waiting Period: Same Day
- Average Approval Rate: 75%
What Are The Pros and The Cons of a Bridge Loan?
The greatest benefit of a bridge loan is the immediate relief it supplies to your business. Having outstanding debt and bills can make you feel like you’re struggling to keep your head above water. This will affect both your working capital and your ability to run your company.
Bridge loan financing is the fastest way to make ends meet and get the funds that your business needs. In addition, these loans allow company owners to be more flexible when it comes to critical managerial decisions. For example, without a bridge loan, you might not want to bulk-order some discounted materials for fear of negatively impacting your working capital.
However, with a working capital loan, you can take advantage of sales with low to no risks. It also gives you a safeguard if you need to spend money unexpectedly on an emergency. The short-term commitment of taking out a bridge loan is also highly appealing, especially for small business owners with outstanding debts.
While gap financing can solve many of your company’s problems, there are some downsides to consider. First, since bridge loans usually have short terms, they’ll have higher interest rates than a long-term small business loan. While each loan is different, the average interest rate for a bridge loan is around 6%-10%. In addition, some lenders impose a variable prime rate, which means you might have to pay even more interest over time.
Closing costs and other associated fees are also higher than traditional loans. Applying for bridge financing may also require some important collateral, like your company’s inventory. All of these risks might be intimidating for business owners with an unsteady cash flow.
However, there are ways to mitigate these risks. First, work with a lender to formulate fair and realistic repayment schedules for your small business loan. Also, to avoid defaulting on your bridge loan, make sure that you won’t need gap financing for longer than a year. Gap funding is a valuable tool to keep your business running, but it should only be used as a short-term solution.
How to Get Bridge Capital Funding for Your Small Business with First Down Funding
Business owners have a lot of options when it comes to securing bridge capital funding. The SBA offers working capital loans, and you can also take out a loan from the bank. However, First Down Funding has the most options for small business owners with varying credit scores and an easy application process. Despite your business’s success, many banks and other traditional funding providers might turn you away if you have poor credit.
If you have some assets that can be leveraged, like big future transactions, First Down Funding will work with you. First Down Funding will also accept a cash down payment in good faith. First Down Funding won’t judge a business owner’s credit based on the business’s credit. Your personal credit might be substantially better than your company’s credit.
In this case, all you need to do is sign a personal guarantee that you will have no problems making loan payments. No matter what type of credit score you have, the only working capital loan requirement is a healthy business.
Why You Should Choose First Down Funding
First Down Funding understands the importance of fast approvals to improve your cash flow for a struggling small business. Applying for gap financing is a quick, easy experience with no deceiving fine print.
First Down Funding understands every business is different to offer flexible terms depending on your specific business needs.
First Down Funding offers excellent personalized customer service. If you need clarification on anything, an empathetic and knowledgeable associate can assist you and support you through the whole loan process, starting right after submitting the online application.
And since small business owners typically need their funds quite fast, so once you’ve been approved, your funds will be available no later than 72 hours.
What Other Business Loans Does First Down Funding Provide?
First Down Funding also realizes that bridge financing might not be the right solution for every small business. A personal funding manager can work with you to identify another loan type that may be more suitable for your business. In addition to bridge funding, first Down Funding offers other effective business financing solutions:
- Working Capital Funding: Covers short-term needs related to the daily operations of a small business
- Merchant Cash Advance: Provides business owners with immediate funds in exchange for a portion of future profits.
- Small Business Funding: Usually, long-term funding provides cash when your company experiences a shortfall in its cash flow or needs to support growth using a long-term loan.
- ACH Business Loans: Provides businesses with immediate cash based on your company’s daily or weekly sales.
- Next-Day Funding: Provides smaller amounts with quick repayment schedules.
- Short Term Business Loans: Provides one amount quickly to cover urgent costs.
- Long Term Business Loans: Provides a loan with a repayment schedule over a longer time than the others.
Apply online today for bridge funding with First Down Funding or talk to an expert funding manager to identify the best funding option for your business.