No Credit Check Loan – A Bridge to Financial Crisis


A bridge loan is typically a financial arrangement for a short period, usually for a period of 2 months to 3 years, pending the arrangement of larger or longer term loan. It is usually known as bridging a loan in US or caveat loan in some applications.
These loans with no credit check are interim finance till the longer term loan is sanctioned. It will be paid back as soon as the larger loan is made available. A business cannot be run without funds. And our traditional bankers have to follow their process of documentation and getting satisfied about the credit history of borrower, which take long time. Meanwhile a businessman will look for a short term loan to run the business and fulfil the basic requirements of doing business. This loan will be repaid as soon the actual long is received. Bridge loan is usually expensive compared to traditional loan as they take additional risk to run the business. Also sometimes lender asks for additional collateral security for this facility also as this loan is given quickly without looking for proper documentation.
Bridge financing is used mostly in real estate financing to quickly close on the property. People will get the booking for the property by paying the token money with the help of bridge financing and then pay out the full amount later when the full loan is sanctioned. It may be used for some short term benefit commercially in real estate with the bridge financing and the loan is repaid when the property is sold. This risk is taken by brokers of real estate.
This loan is for short term or unusual circumstances. As the loan is given for a short period there is no credit checks are made on the borrower for such loan but higher interest is charged up for the loan. For Example; when the construction company will need the bridge financing while taking up any new project and it will be applied for approval. As it is not fixed that project will get finalised the lenders will be at risk while lending the money, so the interest charged by banks will be higher for covering the risk. When the project is approved, it becomes eligible for loan, so the borrower can apply for larger loan with lower interest rates as there is now certainty to the lender that the project will come into existence.
A bridge loan is also important when you need to make down payment for the new house. A bridge loan is used to ensure proper running of business when a senior partner is retiring from office and the other one wishes to continue to carry on the further business. The bridging loan could be made by looking to the business premises and looking to the way how the money will be raised in future. Hence borrower will be free to raise money without getting into the credit checks by lenders. It is a forward looking approach and because of which no credit checks are taken.


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