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Defining Swing Loans

Capital Corp Merchant Banking previously issued a post highlighting a “hard money” loan. The primary difference between that type of financing and the topic of this post, that of a a swing loan, is the timing aspect.

In this instance, a “hard money” loan is for a real estate asset with a clear path forward while a swing loan (or bridge financing) is for property in a type of transition. In common understanding that type of loan is for a normally short period until an additional, more permanent, type of financing can be procured.

Generally, because a swing loan is based on an unsure future, the interest rate is usually higher. For instance, a bridge loan can normally be procured by a landowner in which the property in question is in the process of being re-classified/re-zoned; in this case, a permanent type of financing, construction loan, could take the place of the bridge.

Of course a swing loan is not solely based on real estate. In fact, many companies seek to obtain this type of loan in order to take them through a transitional period. Some examples would be a company needing financing during a change of its top management or before an IPO.

Should your company be interested in discussing a swing loan or other financing options with Capital Corp Merchant Banking, simply contact us.

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