A bridge loan is a type of short-term financing that helps bridge the gap between two transactions. It is typically used to help individuals or businesses finance the purchase of a new property while they wait for the sale of an existing property to close. In this article, we will explore the definition and meaning of bridge loans, their origin, and their associations, as well as synonyms and antonyms.
Definitions
A bridge loan is a short-term loan that is used to bridge the gap between two transactions. It is typically used to finance the purchase of a new property while waiting for the sale of an existing property to close. The loan is usually secured by the property being purchased.
Origin
The origin of bridge loans can be traced back to the early 20th century when they were first used to finance the construction of bridges. Over time, the term “bridge loan” came to refer to any short-term loan used to bridge the gap between two transactions.
Meaning in different dictionaries
According to Merriam-Webster, a bridge loan is “a short-term loan used to finance an enterprise, investment, or real estate transaction when the cash flow from the sale of an asset is expected after the funds are needed.”
The Oxford English Dictionary defines a bridge loan as “a short-term loan used to provide temporary financing until a more permanent form of financing can be obtained.”
Associations
Bridge loans are commonly associated with real estate transactions, as they are often used to finance the purchase of a new property while waiting for the sale of an existing property to close. They are also used in business transactions, such as mergers and acquisitions, to provide short-term financing until a more permanent form of financing can be obtained.
Synonyms
Some synonyms for bridge loan include:
- Swing loan.
- Interim financing.
- Gap financing.
- Mezzanine financing.
Antonyms
There are no direct antonyms for bridge loan, but some opposite concepts could include:
- Long-term financing.
- Permanent financing.
- Equity financing.
The same root words
The term “bridge loan” is a compound noun made up of the words “bridge” and “loan.” The word “bridge” refers to the idea of bridging the gap between two transactions, while “loan” refers to the money borrowed to do so.
Example Sentences
Here are some example sentences using the term “bridge loan”:
- “We needed a bridge loan to finance the purchase of our new home while we waited for the sale of our old home to close.”
- “The company used a bridge loan to finance the acquisition of their competitor while they secured long-term financing.”
- “The developer secured a bridge loan to finance the construction of their new project before permanent financing was available.”