Bridging finance

Bridging finance is often also referred to as contract finance. If a business has signed a work contract from a client, but does not have the funds required to execute the orders, they can apply for bridging or contract finance. The lender uses the contract as collateral for the money they provide to the company. In some cases the client pays the lender, who in turn will pay the contract owner (the business) and the suppliers. They charge a fee for lending the money. Therefore the contract prices need to be profitable enough to include the cost of borrowing the bridging or contract finance.