In Corporate Finance
Bridge loans are used in venture capital and other corporate finance for several purposes:
- To inject small amounts of cash to carry a company so that it does not run out of cash between successive major private equity financings
- To carry distressed companies while searching for an acquirer or larger investor (in which case the lender often obtains a substantial equity position in connection with the loan)
- As a final debt financing to carry the company through the immediate period before an initial public offering or an acquisition.
Read more about this topic: Bridge Loan
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