In bank/bond deals, the bank loan lenders agree to provide a bridge loan if the borrower cannot issue the high-yield bonds on the closing date. The bridge loan is repaid with the proceeds of the high-yield bonds when they are issued at a later date.

In venture capital investments, the existing venture capital investors agree to provide a bridge loan of convertible notes if the company requires additional cash before it can close the next round of financing with new third party investors. The bridge loan is often accompanied by an equity kicker to compensate the investors for providing the financing, either in the form of a discounted conversion price or a warrant. On the closing of the next round of financing, the bridge loan converts into the securities issued in the new round of financing (typically a new series of preferred stock) and any warrants are exercisable for the new securities at the price per share paid for the new securities.