What type of loan is specifically used for purchasing property or financing a project quickly before securing long-term financing?

A bridge loan is specifically designed to provide temporary financing, allowing borrowers to secure immediate funding for purchasing property or financing a project while awaiting long-term financing options. These loans are typically short-term and are often utilized in real estate transactions where speed is crucial. For instance, a real estate developer might use a bridge loan to acquire a new property or fund construction costs until more permanent financing can be secured, such as a traditional mortgage or a longer-term loan.

This type of loan solves the timing gap between the need for liquidity and the process of obtaining long-term financing, making it an essential tool in real estate and project financing contexts. The flexibility, speed of approval, and ability to handle urgent funding needs distinguish bridge loans from other types of financing, which may require more extensive underwriting processes or longer lead times for approval.