A "bridge loan " is a short-term financing for a company until the time when the business will attract long-term capital or receive funds from the implementation of the project. Accordingly, the name of the specific financing (translated from English - bridge, connection) indicates the use of financing - it is a loan for companies with a term of up to 12 months to ensure the missing financing for the realization of a specific transaction.

Companies most often use bridge financing in the following situations:

1. Business acquisition financing: Bridge financing can be used to help a business acquire another business if it lacks the cash to close the deal immediately. For example, Capitalia financed the owners of RCG Lighthouse to buy a minority stake in the company from another investor. This funding was later returned by selling the company to another investment company in Lithuania.


2. Expansion financing: Bridge financing can be used to help a business expand its operations until long-term financing, such as a bank, is raised. Its metal products manufacturer Nākotne used Capitalia bridge financing with a 12-month term until a long-term commercial bank loan was arranged through a thorough process.


3. Working capital financing: Bridge financing can also be used to help a business meet its short-term working capital needs, such as increasing inventory in preparation for the season. The money in such a situation would be returned after the end of the active season from the income. Mobile telecommunications tower construction company GP Systems raised bridge financing for a 4-month term to implement a major order from LMT. The funding was returned after the completion of the project at the expense of the client.


4. Real Estate Financing: Bridge financing is often used to help businesses purchase or renovate real estate. The loan is returned to the financier after the successful sale or refinancing of the property. Capitalia's client, real estate development company Z-Haus, used bridge financing to purchase a prospective plot of land for the construction of an apartment building. The loan was repaid by profitable refinancing with a private lender.


5. In the implementation of European Union fund projects: short-term financing can serve as the necessary co-financing to implement the fund support program. The loan is returned by receiving funds from grants from EU funds, including the Rural Support Service. For example, Grobiņa's metalworking company Sensotech used Capitalia financing for the purchase of new equipment as part of the EU funds support program, repaying the funds together with receiving the grant.

If you're considering bridge financing, it's important to carefully consider your needs and goals. You should also compare the rates and reputation of different lenders before choosing a payday loan provider. Founded in 2007, Capitalia is an alternative financing provider with the longest operating history and the highest recognition among financed companies. Capitalia operates in accordance with European best practice lending standards and has already financed more than 5,000 businesses in the Baltic States, including also offering loans with the support of the state and the European Union.