What Is Bridge Financing?

A type of short-term financing, a bridge loan or bridge financing is often used to pay current debts before securing permanent financing. It offers companies immediate access to funds when they are needed but not yet available. Because of this urgency, a bridge loan typically comes with high-interest rates and requires some form of collateral, such as real estate or a high-value company inventory.

Bridge financing is also arranged over a short period of time and does not require strict documentation. For instance, if there is a time gap between the sale of an existing property and the purchase of a new property, a buyer may apply for a bridge loan to facilitate the purchase. In this example, the original property waiting to be sold becomes the collateral for the bridge loan. Once the buyer secures long-term or permanent financing, they can use the money to pay back the bridge loan. Bridge loans can also be used to meet capitalization needs, such as when retrieving property from foreclosure or closing on a property quickly.

Businesses also apply for a bridge loan to temporarily cover operational expenses, such as rent, payroll, utility bills, and inventory costs. A company in financial distress can take up a bridge loan to continue running its business while searching for a large investor or a buyer for the company. In this case, the lender may take an equity stake in the company to protect its interests while waiting to get repaid.

While bridge loans allow individuals and businesses to secure opportunities they would otherwise not have, there are also drawbacks that they should consider. For instance, in the case of the above example of a buyer waiting for a property to sell, taking a bridge loan leaves an individual with the burden of paying one mortgage and a bridge loan as they wait for permanent financing to finalize. If the owner defaults on these obligations, a bridge loan lender can foreclose on the property. Besides high-interest rates, there are other charges associated with a bridge loan, such as lender legal, valuation, and front-end payments.

There are four main types of bridge loans: open, closed, first charge, and second charge. The repayment method is not specified at the initial inquiry in an open bridge loan, so there is no fixed payoff date. However, to ensure the security of funds, most bridging companies subtract the loan interest from the loan advance. Because of the uncertainty that the loans will be repaid, lenders typically charge a high-interest rate for open bridge loans.

Meanwhile, a closed bridge loan is given to companies agreeing that it must be paid within a specific time frame. Unlike an open bridge loan, a closed bridge loan features much lower interest rates because of the greater certainty about the loan repayment.

The first charge bridge loan also has a time frame for repayment. In addition, the lender has priority on the property before any other lending company. Lenders also charge low-interest rates on first-charge bridge loans due to the relatively low risk.

A company with a first charge loan can also obtain a second charge loan for a short period of time, typically less than 12 months. This loan carries a high risk of default and so comes with a high-interest rate. Moreover, the lender can also recoup payments from the client after paying all liabilities borrowed from the first charge bridge loan. However, the second charge loan lender possesses similar repossession rights of property as the first charge lender.

Property Management - Overview

For landlords, one of the biggest decisions to make is whether they should hire a property management company. Some landlords manage their properties on their own or with the help of a resident manager. However, sometimes landlords need more help that only a property management company can provide.

Property management refers to the process of managing various residential and commercial real estate properties. Typically, landlords hire a property management company if they own numerous rental units and properties. If the landlord lives some distance from their rental property, hiring a property management company can help deal with daily problems that are difficult to handle from afar.

Even if the landlords enjoy hands-on management, they might not have enough time to oversee the property, hence the advantage of hiring a property manager. This way, they can focus on growing their real estate business, searching for new properties to invest in, and overseeing renovations.

While hiring a resident manager is always an option, some property owners don’t necessarily want to become employers. By employing a resident manager, property owners have to handle payroll and other legal requirements and considerations. On the other hand, a property management company is an independent contractor and not an employee.

If the property itself is part of an affordable housing program, it can be complicated and time-consuming to manage. With an affordable housing program, owners typically receive financial aid in the form of a low-interest loan, grant, or tax credits in exchange for renting part or all of the property to tenants who earn below a certain income level. To receive this financial aid, the owners must comply with a very complex set of rules. Because so much is at stake, it can be worth hiring a property management company with expertise and experience navigating affordable housing programs.

To operate as a property manager, an individual must obtain a property management license or a real estate broker’s license, depending on the specific requirements of the state where they live and work. The property management license can be acquired through local authorities, real estate boards, and state governments.

The responsibilities of a property manager depend entirely upon what was stipulated in the contract between the company and the property owner. While some owners may only want the property managers to collect rent, others prefer property managers to oversee all aspects of the property.

To become a good property manager, they must know the state and national landlord-tenant laws. They must also know how to screen tenants, terminate a lease, and evict tenants when necessary. Property managers are responsible for the upkeep of the property. Property managers must promptly respond to and address repair and maintenance requests to ensure safety and habitability. This includes pest extermination, water leaks, and trash removal.

Owners also hire property managers with the stipulation that the latter will market the property to new tenants. This job involves taking photographs of the property and listing it on housing websites. They are also responsible for setting a rental rate for the property by assessing its condition, location, and the current market.

When dealing with a move-out, property managers must assess the property for damage. Depending on the condition, they can determine how much of the tenant’s deposit will be returned. Property managers must also ensure the unit is clean and ready for the next tenant.

If the property has other employees, such as a security guard or an in-house cleaning staff, property managers are responsible for overseeing them. This task also involves hiring, setting salaries, and termination. Overall, the property manager is in charge of supervising the property budget and keeping all records. They organize all the tenant leases, complaints, and repair costs. If the property owner needs help filing taxes, property managers can step in and file the taxes themselves.

Division I National Wrestling Duals to Return in December 2021

In August 2021, Frank Popolizio, founder of Journeymen Wrestling, a New York-based wrestling event organizer and sponsor, announced they are reforming the college wrestling’s Division I National Duals. Scheduled for December 20 and 21 of the same year, the championship will take place at Northwest Florida State College in Fort Walton Beach, Florida.

Hosted by the National Wrestling Coaches Association (NWCA) from 1992 through 2017, the annual National Duals was among the flagship events of Division I Wrestling, scoring top attendance and viewership. Although the NWCA still hosts the multi-divisional national duals for Division II, III, National Association of Intercollegiate Athletics (NAIA), and junior college, the Division I portion of the championship dissolved in 2017. Then Pennsylvania State defeated Oklahoma State, 27-13.

Drawing on his over a decade of experience in running national-level wrestling events, Frank Popolizio took on a mission to bring back that Division I National Duals both out of nostalgia and desire to bridge the gap in the collegiate team competition. Frank’s fascination with the duals and particularly a dual championship dates back to the late 1990s when he watched his brother Pat Popolizio, current North Carolina State head coach, wrestling in the National Duals while at Oklahoma State.

He reminisced of taking an airplane twice a year to watch the collegiate wrestling: NCAAs and the National Duals. The created ambiance was uncanny, and being aware of wrestling fans’ equal appreciation for duals, Frank thought it was about time for the high-stakes and unyielding dual competition to make a return.

The National Duals will feature 12 teams. Among them are five of the 2021 top seven teams from the National Collegiate Athletic Association (NCAA): Arizona State Sun Devils, Michigan Wolverines, North Carolina State Wolf, Missouri Tigers, and the 2021 NCAA Champions, the Iowa Hawkeyes. Also, Cornell Big Red, who missed the championship the previous year due to the COVID-19 pandemic, and three other top 25 finishers, Virginia Tech Hokies, Northern Iowa Panthers, and Central Michigan Chippewas, are in the line-up. The defending Eastern Intercollegiate Wrestling Association (EIWA) Champions Lehigh Mountain Hawks, together with Oregon State Beavers and Hofstra Pride, round the 12-team field.

The 12 teams will form four pools of three. They will be seeded and separated to ensure they will not face an inter-conference opponent. On the first day of the competition, each team will wrestle two duals. On the second day, the winners of each pool will advance to a four-team bracket for semi-finals and finals to determine a National Dual Champion. The remaining schools will wrestle extra duals against teams of correlation pool placement.

Journeymen also invited the top two returning teams in each wrestling conference. The top returning team in the Mid-American Conference (MAC), the Central Michigan Chippewas, was the only team that accepted the invitation. As a result, Hofstra Pride, which finished fourth in the EIWA, gained entry. All representatives of the Southern Conference (SoCon) declined participation.

While the event’s name is the National Duals, some high-profile matchups for all 12 participating teams are still expected to take place, turning the championship into an exciting midseason milestone in the Division I wrestling schedule.

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How Do Debt Restructuring and Debt Refinancing Differ?

Debt restructuring and debt refinancing are often used interchangeably, even by experienced financial professionals, but they are two separate processes. While both relate to debt reorganization occurring to improve a person or an entity’s financial condition, the two differ regarding the contract, as well as circumstances, reasons, and frequency of use.

When it comes to contracts, debt restructuring involves the modification of an already existing contract. For example, common restructuring would be prolonging the due date for the principal payment on a debt contract or altering the frequency of interest payments. Meanwhile, debt refinancing is about starting a new contract with better terms than the previous one and can pay down the latter’s obligation. For example, a borrower can apply for a new, cheaper loan and use its proceeds to pay off the liabilities of an existing loan.

As for circumstances, reasons, and frequency of use, debt restructuring usually happens in special circumstances and is more extreme than debt refinancing. Restructuring could negatively impact a person or company’s credit score, so it is often the last resort for borrowers in dire situations. These include borrowers considered financially unstable and unable to meet debt obligations. They are running the risk of defaulting and thus must negotiate with their creditors to modify the existing contract. The modifications, however, should serve both parties.

If borrowers are aware that they will not pay on time or that a layoff has destabilized them financially, it is advisable to negotiate with the lenders. Lenders do not want borrowers to default on their loans because bankruptcy-related costs are much higher. Thus, in most cases, they are willing to negotiate with distressed borrowers to restructure the loan. Possible restructuring means include waiving late fees, extending payment days, or changing the frequency of payments.

Another option used by large, well-established corporations is swapping out debt for equity. Furthermore, such swaps can also happen with mortgages when a household trades equity in their home to lower the mortgage payments. Debt restructuring enables borrowers to preserve their liquidity, which allows them to restore or maintain cash flow sources to repay the renegotiated loan.

Debt refinancing is quicker and easier to execute, and thus, more liberally used than restructuring. Furthermore, it impacts a credit score positively because the original loan will be marked as paid off.

While the reasons why borrowers may opt for refinancing vary, among the most common ones are to reduce interest rates on loans, consolidate debts, and change the loan structure. Those with high credit scores could benefit from refinancing because it can secure more favorable contract terms and lower interest rates.

Fundamentally, refinancing a debt means replacing one loan with another. Thus, this strategy is often employed when a change in interest rates that may impact new debt contracts occurs. For example, an interest rate cut by the US Federal Reserve will lower the yield on interest payments of new loans, which will benefit borrowers. In this circumstance, debt refinancing enables them to pay a much lower interest over time for the same nominal loan.

Before trying to pay off loans early, borrowers must do their due diligence and calculate and compare the net present value of the cost of the two loans. The reason is many fixed-term loans have call provisions for penalties in the case of paying down loans before their maturity.

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