Legal Definitions - bridge loan

A bridge loan is a short-term loan that is used to cover costs until more permanent financing is arranged. It is also known as a swing loan. For example, if someone is buying a new home but has not yet sold their current home, they may take out a bridge loan to cover the down payment and closing costs on the new home until they sell their current home and can pay off the loan.

Another example is a business that needs to cover expenses while waiting for a larger loan to be approved. They may take out a bridge loan to cover the costs until the larger loan comes through.

Overall, a bridge loan is a temporary solution to cover expenses until a more permanent financing option is available.