If you’re looking for a source of working capital, there are many lending options out there. One popular option is bridge financing, also called hard money financing.

Is this option right for you? Before you start looking for bridge loans, it’s important to do your research. To help you out, here are answers to the biggest questions applicants have about this type o financing.

Where Can You Get Bridge Financing?

Unlike mortgages and other traditional loans, bridge financing isn’t offered by banks and credit unions. Instead, you have to apply to private money lenders. These entities specifically lend to investors and often offer loans that banks and credit unions aren’t able to. This is due to regulations that govern traditional lenders’ approval processes.

Private money lenders, on the other hand, aren’t subject to the same limitations, which means they’re able to cut down on paperwork. This can be a huge boon for investors who need quick cash.

How Is a Bridge Loan Different From a Mortgage?

One of the biggest differences between a bridge loan and a mortgage is term length. Mortgages are designed to be long-term and typically last 30 years. Bridge financing, on the other hand, is short-term and rarely lasts longer than two years.

Additionally, applying for a mortgage can be a complex and lengthy process. Your bank may ask for financial documents, your credit score and proof of income, which it must then verify. This can take up to 45 days. Bridge financing, on the other hand, puts the focus on your credit history. Getting an approval for a bridge loan is extremely quick — in some cases, you can get cash in a matter of days.

What Are the Benefits of Bridge Financing?

One of the most common uses for bridge financing is commercial real estate investment. The fast approval time gives buyers an advantage, as sellers may be willing to take a smaller offer if it means immediate cash. Additionally, bridge financing is very flexible and can be used to purchase property, pay for renovations or refinance another loan.

Bridge loans are a great option if you’re looking for a stop gap measure or short-term financing. As you look for funding, make sure you don’t go with the first lender you come across. Instead, get several offers and compare them to determine which is the most advantageous. Once you’re sure you’re getting the best deal, you can use those funds to pursue business opportunities and find success.