InvestorQ : What does transactional funding mean?
Ankit Patil made post

What does transactional funding mean?

Diya Chitale answered.
3 months ago
It is a borrowing process under which an investor borrows short-term capital to close a deal. This process is also known as ABC funding or a one-day bridge loan. The lender gives a 24-hour loan to the investor 100% of the capital required. There is no requirement of a credit check or down payment under this funding but the investor must have an end buyer to complete the transaction.

This type of funding is popular among investors who are willing to purchase property for the purpose of wholesaling and do not want to put their funds in the transaction. So, the transaction funding lenders finance such transactions for a fee, which is generally a certain percentage of the loan and a base charge (minimum fee). This type of funding generally remains for 1-14 days, and if the loan is not repaid within that period, it is converted into an interest rate loan.

The concept is generally used in real estate funding, but can also be utilized to the benefit of startups. So, this concept boils down to the leveraging of people and resources. An investor works as a mediator to leverage the interest of two parties.

So, here are some of the benefits of transactional funding:
  • One’s offer may have an edge over the other buyers
  • A property deal is closed without using its own capital, and others.