Describe Bridge Finance.

Bridge Finance It refers to making funds available by commercial banks for meeting immediate requirements of the business pending release of loans sanctioned by the financial institutions or proceeds of fresh issue of capital. As the nature of bridge finance is to fill in the gap to make immediately the funds available for business, commercial banks provide this type of finance for short term. The bridge finance assumes demand character and is guaranteed by the third person. The term is also used by the financial institutions while making funds available to the borrower company out of the sanctioned amount pending completion of various formalities viz., signing loan agreement, and other security documents. The financial institutions provide this facility only to those companies who have been sanctioned the loan for project financing. The basic idea in bridge finance is to provide funds to the company to meet its pressing requirements immediately.