By Brad MacLiver
Authorship and profile at Google
With the changes in the NV pharmacy industry independent drug store owners, small and regional pharmacy chains, andNevada pharmacy equity investment groups are acquiring pharmacies to obtain a larger competitive footprint in a geographic area. During the acquisition phase of the business expansion there may be opportunities that require action, which is faster than the traditional funding process.
Bridge Loans are a short-term financing option and are used while waiting for permanent financing, or the next stage of financing to be obtained. Bridge loans provide funding to "bridge" the gap between a company’s current needs and their long term financing requirements. Permanent financing is generally used to "take out," or pay back, the bridge loan.
One of the characteristics of a bridge loan is that they can close quickly, which in turn allows a company to capitalize on a timely business opportunity, or acquisition. The quick access to money can also allow a business the chance to avoid penalties, bankruptcy, or other temporary problems. If longer term issues need to be dealt with, this “transitional financing” provides the company time until longer term financing can be secured.
Another characteristic of bridge loans is that the process usually requires less documentation than conventional financing. Bridge loan lenders don’t usually have the same government regulations to adhere to, so they tend to have more flexibility in their lending criteria and the documentation they require. However, less documentation does not mean they won’t perform due diligence to have a comfort level with the transaction before they fund.
Examples of using Bridge Loans in Nevada Pharmacy Transactions:
1. An independent NV pharmacy owner learns of health issues and decides to quickly sell the family owned pharmacy to an employee or local competitor. Traditional financing for the pharmacy buyer may require a time line that is not acceptable when considering the circumstances. A bridge loan can be used to quickly accomplish the transaction.
2. A smallNevada pharmacy chain needs $1 million to expand their business. They have 3 new equity investors who will be investing in the firm over the next 6 months, but at different intervals. However, the business has opportunities which require action sooner than 6 months. The quick closing bridge loan allows the NV pharmacy chain access to the needed funds so they can complete their expansion and increase profits. Money from the 3 new equity investors will pay off the bridge loan.
3. ANevada pharmacy owner in a leased location has an opportunity to quickly acquire a commercial property that would be a great pharmacy location, but the property is in disrepair. A bridge loan provides the needed funds to acquire and rehab of the property and once that is complete conventional long term financing can be obtained.
4. A pharmacy group developing new pharmacy locations in NV can receive bridge loan funding to get through the permitting process of a project when conventional financing isn’t available at this early stage due to there is still too much risk. A bridge loan allows the project to move into the construction phase and then qualify for other forms of financing.
5. When aNevada pharmacy is owned by two or more partners and one of the partners is ready to exit the business, a bridge loan can help ensure the cash flow and uninterrupted operation of the business during the partner buyout.
6. Real estate or equipment purchased at auction could have a narrow window to close the deal. The timing of traditional financing methods would prevent the buyer from proceeding with the opportunity. THe benefits of bridge loans permit the pharmacy owner inNevada to quickly respond to the opportunity.
If there are business opportunities, opportunities to buy or sell pharmacies, quickly approaching deadlines, old loans maturing before a new loans can be taken out, funding necessities during the permit, planning, or evaluating stages, etc., bridge loans are an invaluable tool for financing.
Tips regardingNevada pharmacy bridge loans:
1. Bridge loans can be obtained quickly, but they also expire quickly.
2. A bridge loan is similar to a hard money loan and the terms are often used interchangeably during conversation. Both loans are short-term, high interest rate, non-standard loans. However, amongst some, hard money refers to lending sources while a bridge loan refers to the duration of the loan.
3. Because bridge loans usually come with higher interest rates than traditional financing a larger down payment, meaning a lower Loan to Value (LTV) and a lower level of risk and provides an opportunity for lower interest rates.
4. With the shorter time period of bridge loans borrowers will need to be aware that fees for valuations, legal, dues diligence, etc., will be amortized over a shorter period than traditional financing transactions.
Understand the types of deals that require a bridge loan may be considered speculative in nature, or have higher risk factors. Due to this many banks do not offer bridge loans. Banks must meet government regulations and need to justify their lending practices. Riskier bridge loans do not usually fall within the lending parameters of many banks. Therefore a majority of the bridge loans will come from private investment firms. It is best to consult a company that has access to a number of funding sources who provide bridge loans.
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Authorship and profile at Google
With the changes in the NV pharmacy industry independent drug store owners, small and regional pharmacy chains, and
Bridge Loans are a short-term financing option and are used while waiting for permanent financing, or the next stage of financing to be obtained. Bridge loans provide funding to "bridge" the gap between a company’s current needs and their long term financing requirements. Permanent financing is generally used to "take out," or pay back, the bridge loan.
One of the characteristics of a bridge loan is that they can close quickly, which in turn allows a company to capitalize on a timely business opportunity, or acquisition. The quick access to money can also allow a business the chance to avoid penalties, bankruptcy, or other temporary problems. If longer term issues need to be dealt with, this “transitional financing” provides the company time until longer term financing can be secured.
Another characteristic of bridge loans is that the process usually requires less documentation than conventional financing. Bridge loan lenders don’t usually have the same government regulations to adhere to, so they tend to have more flexibility in their lending criteria and the documentation they require. However, less documentation does not mean they won’t perform due diligence to have a comfort level with the transaction before they fund.
Examples of using Bridge Loans in Nevada Pharmacy Transactions:
1. An independent NV pharmacy owner learns of health issues and decides to quickly sell the family owned pharmacy to an employee or local competitor. Traditional financing for the pharmacy buyer may require a time line that is not acceptable when considering the circumstances. A bridge loan can be used to quickly accomplish the transaction.
2. A small
3. A
4. A pharmacy group developing new pharmacy locations in NV can receive bridge loan funding to get through the permitting process of a project when conventional financing isn’t available at this early stage due to there is still too much risk. A bridge loan allows the project to move into the construction phase and then qualify for other forms of financing.
5. When a
6. Real estate or equipment purchased at auction could have a narrow window to close the deal. The timing of traditional financing methods would prevent the buyer from proceeding with the opportunity. THe benefits of bridge loans permit the pharmacy owner in
If there are business opportunities, opportunities to buy or sell pharmacies, quickly approaching deadlines, old loans maturing before a new loans can be taken out, funding necessities during the permit, planning, or evaluating stages, etc., bridge loans are an invaluable tool for financing.
Tips regarding
1. Bridge loans can be obtained quickly, but they also expire quickly.
2. A bridge loan is similar to a hard money loan and the terms are often used interchangeably during conversation. Both loans are short-term, high interest rate, non-standard loans. However, amongst some, hard money refers to lending sources while a bridge loan refers to the duration of the loan.
3. Because bridge loans usually come with higher interest rates than traditional financing a larger down payment, meaning a lower Loan to Value (LTV) and a lower level of risk and provides an opportunity for lower interest rates.
4. With the shorter time period of bridge loans borrowers will need to be aware that fees for valuations, legal, dues diligence, etc., will be amortized over a shorter period than traditional financing transactions.
Understand the types of deals that require a bridge loan may be considered speculative in nature, or have higher risk factors. Due to this many banks do not offer bridge loans. Banks must meet government regulations and need to justify their lending practices. Riskier bridge loans do not usually fall within the lending parameters of many banks. Therefore a majority of the bridge loans will come from private investment firms. It is best to consult a company that has access to a number of funding sources who provide bridge loans.
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