Swing loan

A swing loan is a debt that spans the time period between the end of a prior loan and the beginning of a replacement loan. The swing loan is intended to cover a relatively short period of time between these two loans. An implicit part of a swing loan is that the borrower intends to pay it off with the proceeds from a replacement loan, rather than paying it off with cash reserves.

A swing loan is commonly used when an organization wants to replace a construction loan with long-term debt that it intends to pay down in regular installments over a number of years. A swing loan is typically secured by facilities or fixtures. The interest rate on this type of loan tends to be relatively high.

Similar Terms

A swing loan is also known as a bridge loan.