INTERIM AND PERMANENT

FINANCING
Group – 5
Samriddhi
Saumya patel
Tanvi giri
vrittika
INTERIM FINANCING
Interim financing, also called gap financing or
bridge loan, is the process of obtaining temporary
term financing to close a transaction. Usually, it is
a short-term loan arranged to cover a company's
cash needs until a long-term loan is finalized.
INTERIM FINANCING

Interim financing is intended to support the transaction, until to

arranging permanent financing. Bridge loans can be obtained by
individuals, or corporations, and they can be structured of
different ways. Fundamentally, interim financial is way to fill time
gap, when the capital is needed to accomplish a current and a
future objective. It is a way to fill the financial space between
point A and B where funds may be insufficient
ADVANTAGES AND DISADVATAGES
• The main advantages of interim financing are:
• Interim financing may help prevent losing of chance to purchase or sale of property
• In contrast to traditional loans, a bridge loans have a faster application, approval and funding
process
• Most of the interim financing does not provide repayment penalties.
• The most important disadvantages of interim financing are:
• relatively short terms high interest rates large origination fees.
CONCLUSION

Interim financing is a short-term loan

arranged to cover a companies cash
needs until a long-term loan is finalized.
Other approaches related to it include
factoring, asset-based lending, merchant
cash advances, equity financing,
government loans, and venture capital.
PERMANENT
FINANCING
Permanent Financing refers
to a longer term loan or debt
instrument. It can also be
thought of as longer term
equity financing or debt. Most
of the time, such long term
financing becomes utilized to
buy or develop the kinds of
long lasting fixed assets like
machinery or factories. The
payoffs and contributions
from such longer term assets
happen over grater lengths of
time.
 DIFFERENCE BETWEEN INTERIM AND
PERMANENT FINANCING

A Bridge loan is short-term mortgage financing that is in place between the termination of one loan and the
beginning of another loan. Also, a form of interim financing generally made between a short-term loan and a
permanent loan, when the borrower needs to have more time before securing the long-term
financing.Community, regional and national banks often specialize in providing bridge loans. Banks and
credits unions raise capital for lending operations through accepting short-term deposits (saving accounts and
certificates of deposit). Bridge loans are structured to be repaid in 12-36 months, so the capital structure
aligns effectively with the funding mechanism.Permanent loan is long-term mortgage financing, usually
covering development costs, interim loans, construction loans and financing expenses. The loan differs from
the construction loan because the financing goes into place after the project is constructed and available for
occupancy. A permanent loan is a long-term obligation, generally for a period of 10 years or more, so it is a
stark contrast from a bridge loan.Conduit lenders originate permanent loans, securitize the loans into a trust,
and then sell tranches to institutional investors. The capital markets provide an effective funding mechanism
for permanent loans by matching long-term investor capital to borrowers with long-term financing needs.
THANK YOU!