Bridge fund is a short-term financing with a term of six months, which is a 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 is about to expire, but he has no money to repay it for the time being. Zhang San wants to renew the loan, but if he wants to renew the loan, he must first pay off the loan principal and interest of the Agricultural Bank. In order to successfully renew the loan, Zhang San found a loan company to borrow 5 million yuan, paid off the loan and principal owed to the Agricultural Bank, and then applied for a second loan (renewal loan) at the Agricultural Bank, and then used it again.
A loan that only pays interest without paying the principal is called paying interest on a monthly basis and returning the principal at maturity. Simply put, it only pays interest every month and returns the loan principal 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 monthly, the principal will be paid once every quarter.
2. Pay the interest in one lump sum and repay the principal when due. Pay interest in one lump sum in advance, and repay the principal on the final maturity date.
3. Pay interest monthly 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.
4. With the loan, the organization will give you a maximum amount, and you can apply at any time and repay at any time within a certain period of time.
5. Irregular repayment, the borrower can repay all or part of the loan according to his own cash flow.