Bridge fund is a kind of short-term financing with a term of 6 months, which is a kind of fund connected with long-term funds. The purpose of providing bridge funds is to achieve the conditions of docking with long-term funds through the financing of bridge funds, and then replace bridge funds with long-term funds.
For example, Zhang San borrowed 5 million yuan from the Agricultural Bank, which will expire soon, but he has no money to pay it back for the time being. Zhang San wants to renew the loan, but to renew the loan, he must first pay off the loan principal and interest of the Agricultural Bank. In order to renew the loan smoothly, Zhang San borrowed 5 million yuan from the loan company, paid off the loan and principal owed to the Agricultural Bank, and then applied for a second loan (renewal loan) at the Agricultural Bank for reuse.
A loan that only pays interest and does not repay the principal is called paying interest on a monthly basis and repaying the principal at maturity. Simply put, it only pays interest every month, and the loan principal is returned in one lump sum when the loan expires.
Common repayment methods include:
1. Pay interest monthly and repay the principal quarterly. As long as the interest is paid every month and the principal is paid once every quarter.
2. Pay interest in one lump sum, and repay the principal at maturity. Pay the interest in one lump sum in advance, and then repay the principal on the final maturity date.
3. Pay interest on a monthly basis in the early stage, and in the average capital in the later stage, you can pay interest in the first few months and then pay the principal and interest in the next few months.
With the loan, the organization will give you a maximum amount, and you can apply at any time within a certain period of time and repay at any time.
5. Irregular repayment, the borrower can repay all or part of the loan according to his own cash flow.