---
title: "What Is Bridge Loan?"
term: "Bridge Loan"
description: "A bridge loan is short-term financing that covers a gap until longer-term funding arrives — usually until a priced equity round closes, an acquisition completes, or permanent debt is arranged."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/bridge-loan
---

# What Is Bridge Loan?

> A bridge loan is short-term financing that covers a gap until longer-term funding arrives — usually until a priced equity round closes, an acquisition completes, or permanent debt is arranged.

**A bridge loan** is short-term debt meant to carry a company from today to a defined future funding event.

### How it works

A startup might take a bridge loan when a Series B term sheet is signed but closing is six weeks away, or when a bank line is being finalized. The lender — often an existing investor, a venture debt provider, or a specialty lender — advances cash now. Repayment typically comes from the upcoming equity round, asset sale, or replacement with longer-term debt.

Terms are usually tighter than venture debt: higher interest, shorter maturity (often a few months to a year), and sometimes warrants or conversion rights. Collateral can include cash, receivables, or a lien on assets. Because the clock is short, lenders focus on the credibility of the exit event, not long-run profitability.

### Why it matters

- **Founders:** Bridge loans can prevent a fire sale or layoffs when funding is delayed. They also add another creditor to the cap table story — know the covenants before you sign.
- **Investors:** A bridge from insiders often signals confidence that a round will close. A bridge from outsiders at punitive rates can mean insiders would not put in more equity.

### Common mistake

Treating a bridge loan as free runway extension without a hard plan for repayment. If the priced round falls through, the company may owe principal plus fees with no fresh equity to pay it off — forcing a down round, distressed sale, or shutdown.

### Related ideas

See also [bridge note](/glossary/bridge-note), [bridge round](/glossary/bridge-round), venture debt, and [burn rate](/glossary/burn-rate).

## FAQ

### What is bridge loan in simple terms?

A bridge loan is temporary money that keeps a company operating until a bigger, planned source of capital shows up. Think of it as a plank over a creek — useful, but you still need solid ground on the other side.

### Why does bridge loan matter?

For founders, it can extend runway when a round is close but not closed. For investors, it signals whether the company can reach the next milestone without diluting too early — or whether debt is masking a deeper funding gap.


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Source: https://venturecapitaltracker.com/glossary/bridge-loan