USDA Bridge Loan: What is it and why does my business need one?
If you are a business that has applied for a loan under one of the USDA’s guaranteed loan programs, you will already be familiar with the scheme and the many benefits that it provides to rural businesses.
However, you may be less familiar with the concept of a USDA bridge loan. This article will explain exactly what a USDA bridge loan entails, as well as the benefits it could create for your business and how you can apply for one.
What is a USDA bridge loan?
The USDA guaranteed loan program is a scheme backed by the US government, which enables commercial lenders to offer more affordable financing options to rural US businesses. The aim of the program is to increase these businesses’ access to capital, improving the broader economic health of rural communities.
The program is very successful, with a wide range of commercial lenders offering loans under the guarantee. However, the process of securing these loans can be slow, with businesses waiting up to 12 months to receive capital.
That is where a USDA bridge loan can help.
As the name suggests, a USDA bridge loan bridges the gap between USDA lender approval and USDA guarantee program approval, giving businesses access to cash in as little as two weeks.
What are the benefits of a USDA bridge loan?
Once you have been approved for a loan by a USDA lender, rather than waiting 3-6 months for approval from the USDA guarantee program, a USDA bridge loan gives you access to capital straight away.
The process can take as little as two to four weeks, shaving months off the approval wait period and enabling you to pursue your growth plans immediately.
Get growth going
A USDA bridge loan can be used for the same activities you laid out in your USDA guarantee program application. That means you can get started with your growth plans now, whether that be pursuing an acquisition strategy, investing in equipment or purchasing inventory.
A USDA bridge loan is offered in collaboration with your existing USDA lender – this means there is no need to repeat the whole due diligence process. We leverage the existing underwriting to keep the process as smooth and simple for you as possible.
Why might a business apply for a USDA bridge loan?
If you have already applied for a loan under the USDA guarantee program, it is more than likely that you have a planned use for those funds. From purchasing new equipment that will increase the efficiency of your operations, to making a timely acquisition, any delay in accessing capital means that these plans are delayed too.
A USDA bridge loan simply enables you to accelerate these plans, moving the business forward and capitalizing on ripe opportunities.
How to apply for a USDA bridge loan
The first step is to get in touch. If you think a USDA bridge loan would be a good fit for your business, you can reach out to a member of our expert lending team or use this form to request a chat.
We can then liaise with your existing USDA lender and obtain the relevant information we need to move things forward.
The rest of the process will follow that of a conventional loan application, but our continual focus is on making the process as quick and efficient for you as possible.
What happens once I receive the USDA bridge loan?
Now you get growth going! You are free to use the funds to support the plans you laid out in your application.
The USDA bridge loan is designed to support you for a period of three to six months (although this can be extended), at which point you will receive your USDA guaranteed loan from your original USDA lender and the USDA bridge loan will be refinanced.
Want to know more? Speak with a member of our expert lending team.