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 to 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.