Sometimes a tunnel loan is faster.
Maybe you could explain what that is?
In NYC there is a phrase "Bridge and Tunnel crowd":
https://www.urbandictionary.com/define.php?term=bridge%20and...
Which I suspect this is a riff on.
Bridge Loans
11–20 of 67 posts
Re: Bridge Loans
#12Oh, I remember when these were popular for dot-com who just needed to get to the next round. Many did not. And a loan has baggage that equity doesn't. Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm.
> Oh, I remember when these were popular for dot-com who just needed to get to the next round.
One of the best skills to learn is when to stop throwing good resources after bad. Sure, maybe you need just a little more to get over the finish line, but more than likely you are just investing more resources into delaying failure.
People often bring up Elon Musk and Tesla as a positive example of perseverance, where he was apparently sinking personal money to keep the company alive. It did pay off in retrospect, but there was a very large chance it didn't - and we're just celebrating survivor bias.
> Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm.
You wait, this bubble is about to pop. Not a great time to have large financial obligations. I suspect this will make 2008 look like nothing (people weren't struggling to fuel their cars or eat then).
Re: Bridge Loans
#13Oh, I remember when these were popular for dot-com who just needed to get to the next round. Many did not. And a loan has baggage that equity doesn't. Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm.
> Oh, I remember when these were popular for dot-com who just needed to get to the next round. One of the best skills to learn is when to stop throwing good resources after bad. Sure, maybe you need just a little more to get over the finish line, but more than likely you are just investing more resources into delaying failure. People often bring up Elon Musk and Tesla as a positive example of perseverance, where he w…
> (people weren't struggling to fuel their cars or eat then).
These are cause and effect, though. Average gas shot up to $4 in 2008, too.
Re: Bridge Loans
#14I thought to get a bridge loan, you had to find mismatched Indonesian sesame seed futures prices due to impending cicada hatchings.
Re: Bridge Loans
#15Bridge loans are a lot like being pot committed in poker (when the pot odds for the remainder of your chips are worse than your odds of winning that specific hand). In both situations, you have a lot more information on the immediate situation than in some indeterminate future scenario, so it can sometimes be your best option.
However, there's an obvious bias there, and thinking that you're pot committed when you're not is a pretty common mistake with inexperienced poker players (and investors).
Re: Bridge Loans
#16Oh, I remember when these were popular for dot-com who just needed to get to the next round. Many did not. And a loan has baggage that equity doesn't. Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm.
> Oh, I remember when these were popular for dot-com who just needed to get to the next round. One of the best skills to learn is when to stop throwing good resources after bad. Sure, maybe you need just a little more to get over the finish line, but more than likely you are just investing more resources into delaying failure. People often bring up Elon Musk and Tesla as a positive example of perseverance, where he w…
Gas and food prices would likely drop like a stone if we are facing another 2008-like crisis.
A handful of people made a big bet that during the credit crunch we’d see massive inflation and took big bets against the dollar and cheap oil and lost their shirt
Re: Bridge Loans
#17Oh, I remember when these were popular for dot-com who just needed to get to the next round. Many did not. And a loan has baggage that equity doesn't. Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm.
> Oh, I remember when these were popular for dot-com who just needed to get to the next round. One of the best skills to learn is when to stop throwing good resources after bad. Sure, maybe you need just a little more to get over the finish line, but more than likely you are just investing more resources into delaying failure. People often bring up Elon Musk and Tesla as a positive example of perseverance, where he w…
> You wait, this bubble is about to pop. Not a great time to have large financial obligations.
The people buying these houses have good financial means, when I bought in 2021 the bank looked through all my finances in depth, and they were super conservative about everything.
For example, I own an existing townhome, before agreeing to give me a new mortgage, the bank made me show a signed contract with a tenant for my townhome to demonstrate the townhome wouldn't be a financial burden.
At least in the city I live in, Seattle, the housing supply is so obscenely constrained that only people who can go above and beyond to show they can pay, are even being granted approvals by the banks.
Re: Bridge Loans
#18Payday loans of the startup world
Why would these be payday loans? The lenders also own a large percentage of the shares in the company.
Re: Bridge Loans
#19The comments here seem to forget that financing is ESSENTIAL to startups - even profitable ones.
As a reminder, 99% of the marketcap (value) of a startup is its growth, not its present size/revenue/etc. By mathematical definition, a startup cannot fund fast-enough growth on current profits and therefore requires financing and a lot of it.
You finance a startup with a mix of VC and debt. As the business becomes less speculative ($MMs in revenue) debt becomes more available, and is generally preferable to equity deals for a number of reasons including dilution, board control, etc.
Unclear to me if VC financing availability is disconnected from debt financing, as the blog author seems to imply: when the world tightens, I think it tightens.
source: 30 years of this nonsense spanning multiple booms and recessions.
Re: Bridge Loans
#20Protip: You don't need to be a VC to offer onerous debt financing.
I know individuals that have made a killing offering loans to distressed publicly traded companies. They typically convert to MASSIVELY larger amounts of equity and dump that. Resulting in a death spiral for the company (unless the company's laughable prospects actually panned out), or result in a lien on assets that are also far greater in value than the loan, which is the same in actual bankruptcy, or they get paid back at a nice premium.