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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Bridging loan (bridge finance)

What is a bridging loan, and what does the lender rely on to be repaid?

ONE OF 366 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A bridging loan is short-term finance repaid from a specific future event rather than from trading cash flow: the sale of a property, a refinancing, an equity raise or a bond issue. In property it often funds a purchase before another asset has sold; in acquisitions, a bridge stands in for longer-term debt until that debt can be raised. The lender's question is the exit: how certain the event is, how long it might take, and what the asset is worth if it does not happen. Bridges often cost more than term debt, and some step up the margin the longer they stay outstanding.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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