Bridge loans are exactly what they sound like, temporary financial bridges that help startups get from one funding round to the next. When you’re between major milestones or waiting for your next raise to close, these loans give you the cash you need right now to keep paying your team, covering vendor bills, and maintaining momentum.
The tradeoff? Because bridge loans are short-term and often come with more risk, you’ll typically pay higher interest rates or give investors conversion discounts and warrants as part of the deal.
A few legal protections usually come into play here. Non-Disclosure Agreements (NDA) keep your sensitive company information safe during negotiations. Option pools help you retain and motivate your team. And clawback provisions make sure everyone stays accountable if performance targets aren’t met.
Together, these pieces create a system that keeps your startup running in the short term while protecting your long-term interests (your equity, your governance structure, and the trust you’ve built with stakeholders). It’s about buying yourself time to grow without mortgaging your future.
