Bridge loan, also known as bridge loan, refers to financial institution A's inability to operate due to temporary lack of funds after receiving the loan project, so it consulted financial institution B and asked it to help distribute funds. After the funds of financial institution A are in place, B will withdraw from bridge loan.

For B, this loan is the so-called bridge loan. In China, policy banks such as CDB/ Exim Bank/Agricultural Development Bank play the role of financial institution A, while commercial banks play the role of financial institution B. ..

Extended data

Bridge loan is a short-term loan, which is a transitional loan.

The funds provided by bridge loan to pave the way for M&A transactions can be understood as temporary or short-term loans provided by banks and other financial institutions to borrowers.

Example:

Company A needs a loan to continue or expand production. Because its funds have not been withdrawn or the capital chain is broken, it is impossible to pay off the loan owed to the bank last time, and the bank can't continue to provide loans to Company A. Company A is on the verge of bankruptcy, so it is discussed with Company B to help advance the funds and repay the debt owed to the bank last time.

Then, after the bank closes the account, it will continue to lend to Company A, and Company A will return the funds to Company B, and Company A will continue its production and operation. For Company A, this loan is the so-called bridge loan. To put it bluntly, it is to borrow money from the bank to repay the loan first, and then borrow money from the bank.

References:

Baidu Encyclopedia-bridge loan