AFO · Glossary
Bridge Financing
Short-term debt that funds a specific gap between a triggering event and a known refinancing or capital event.
What this term means in practice
A bridge loan is short-term debt — usually 6 to 18 months — that funds a specific gap between a triggering event (an acquisition close, a refinancing, an equity raise) and a known take-out event that retires the bridge. The lender underwrites the take-out plan as much as the borrower; the credibility of the exit determines the rate.
Bridges are expensive (typically Prime + 4–8%) because the lender accepts concentrated event risk over a short window. They're useful when timing matters — closing an acquisition before a competitor, capturing a real-estate purchase before the market moves — but they should never be confused with permanent capital. Bridges that don't take out on schedule create their own crisis.
The CPA models the take-out scenarios before the bridge is committed: what happens if the refinancing slips by 3 months, 6 months, 12 months. The right bridge is one where the borrower can still service the higher cost even in the slow-take-out scenario.
Where the definition meets your situation.
The CPA can walk through how this concept applies to your business in twenty minutes — what providers will ask, where the negotiation matters, what the trade-offs actually look like in your numbers.