What is a Bridge Loan? Fast Capital for Transitional Moments
Need funding to cover the gap between now and your next milestone?
A bridge loan is a short-term financing tool designed to help companies navigate funding gaps — whether between equity rounds, during an acquisition, or while waiting on incoming revenue or receivables. It “bridges” the gap between today’s capital needs and a more permanent source of funding.
For fast-growing companies, bridge loans can offer speed, flexibility, and breathing room during key transitions — without forcing premature fundraising or reactive decisions.
How A Bridge Loan Works
Bridge loans are typically structured as short-term debt — often 6 to 18 months — with higher interest rates than traditional loans due to their risk and urgency. Some include equity-like features such as warrants or conversion rights, especially if raised from existing investors on your cap table.
Common use cases include:
- Extending runway before a priced equity round
- Financing a pending acquisition or strategic initiative
- Bridging delayed receivables or revenue
- Buying time to reach a valuation-boosting milestone
Because they’re designed to be temporary, bridge loans are often faster to close and more flexible than long-term financing options.
How They Compare to Other Funding Options
Bridge loans are distinct in both purpose and structure:
- Compared to venture debt: Shorter term, often less structured, and sometimes raised internally
- Compared to RBF or cash flow loans: Not tied to recurring revenue or profitability
- Compared to asset-backed loans: Typically unsecured or lightly secured
Bridge loans are not designed to be a long-term solution — they’re a tool to keep you moving forward while a more permanent funding strategy comes into focus.
Why Founders Choose This Path
- Speed: Close quickly when time is critical
- Control: Delay equity fundraising until you’re in a stronger position
- Flexibility: Use funds for M&A, hiring, inventory, or operations
- Optionality: Buy time to evaluate long-term capital options
Founders often turn to bridge loans when they have momentum — but need just a bit more time to get to the next stage without compromising valuation or strategy.
Is a Bridge Loan Right for You?
Bridge loans work best when you have a clear near-term event — such as a funding round, sale, or cash inflow — that will repay or replace the loan. If your business is capital-efficient and has strong fundamentals, a bridge loan can offer the liquidity and leverage you need to reach your next inflection point.
Hum Capital helps companies find capital that fits both their timing and trajectory. Whether you’re gearing up for a raise or navigating a strategic moment, we can match you with lenders who move fast — and structure solutions around your goals.
Explore bridge loans through Hum’s Intelligent Marketplace and stay on track through your next milestone.
