Bridge Loan
Corporate Credit Analysis glossary · Corporate Credit Analysis
Definition
Short-term debt extended to finance an acquisition or refinancing pending a permanent capital-markets takeout (typically high-yield bonds), often with escalating pricing (a 'bridge step-up') if not refinanced within a stated window.
Bridge Loan in plain English
A bridge loan is a fast, temporary loan that 'bridges' a gap until longer-term money arrives — most often so a company can close an acquisition NOW and replace the loan later by selling bonds. It's a lot like using a credit card to buy a house because your mortgage isn't ready yet: handy, but you don't want to sit on it. To push the borrower to refinance quickly, these loans often have a 'step-up': the interest rate climbs the longer it stays unpaid, so dawdling gets painful on purpose.
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