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Bridge Loan

Bridge Loan provide short-term financing and are a “Bridge” to a certain liquidity generating event.

Bridge Loan is typically short-term in nature say up to 12 months and are paid off by  the proceeds of a liquidity event.

Some of the liquidity events wherein the Bridge Loan could be used are as below:


  • Initial Public Offering/ Rights Issue

  • Bond Issuance

  • Sukuk issuance

  • Syndicated Debt issuance

  • Asset Disposal

  • Sale of a division/unit

  • Refinancing

  • Acquisition Finance


Why Bridge Loan

  • Comparatively quick to mobilise: given the short-term nature of financing, its comparatively quick to mobilise from Banks/lenders.

  • Meet with urgent cash usage: Bridge loans facilitate companies to meet with urgent cash requirements (example: consideration for an acquisition) till  the time permanent financing (IPO, Bond, syndicated debt) is mobilised.

  • Meet with refinancing: Facilitates meeting with a large balloon/bullet payment of an existing loan.

  • Mobilised to defer permanent financing: till the loan market is conducive to mobilise permanent financing.


 Pros & Cons of Bridge Loan


  • Easy and quick to mobilise

  • Facilitates meeting immediate financing requirements

  • Unsecured in nature

  • Typically, bullet repayment with no amortisation

  • Comparatively simple documentation



  • Expensive than permanent financing

  • Short-term arrangement

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