A term loan is a loan that is repaid in regular payments (usually weekly or monthly) over a set period of time. Primary Funding generally provides term loans that are repaid anywhere from 6 to 18 months but may be longer in some cases. Term loans are a great way to provide an injection of working capital that gets paid back over a period of time allowing a company to take on new initiatives that will grow profits.
One thing to consider when getting a term loan is whether the interest rate is fixed or floating. A fixed interest rate means that the percentage of interest will never increase, regardless of the financial market. Low-interest periods are usually an excellent time to take out a fixed rate loan. Floating interest rates will fluctuate with the market, which can be good or bad for you depending on what happens with the global and national economy.
A “bridge loan” is basically a short-term loan used by a company to “bridge” a temporary cash gap. These loans are also known as a swing loan, gap financing, or interim financing. A bridge loan is typically repaid in 3 to 6 months but can extend longer. These loans will always have a well-defined and reliable repayment source. A bridge loan essentially “bridges the gap” between the time funds are needed, and generally when funds are expected that will pay off the obligation in full.