This type of business financing is very aptly described by its name, Bridge loans or Bridging loans. This type loan is not a permanent or even long term loan. It is exactly as stated, a bridge between now and when the long term financing is in place. In general, bridge loans are taken out for a maximum of 3 years awaiting long-term or larger financing. The loan’s purpose is only to cover the interim period until the more permanent financing can be arranged. Once the new financing is obtained, the money will be used to pay back the bridge loan.

Bridge loans have a higher interest rate than conventional loans. It is not uncommon for lenders to require cross-collateralization in addition to designating a low loan-to-value ratio in order to lower their risk. However, bridge loans are able to be arranged quickly and do not require a massive stack of paperwork.

Bridge loans are frequently used in real estate purchases to quickly close on property, take advantage of a short-term opportunity, or retrieve an estate from foreclosure. When the property is sold or refinanced, the loan is typically paid back.

Bridge loans are similar to hard money loans as both are not traditional and obtained for unusual circumstances or emergencies. The major difference is that hard money refers to the source whether an individual, private company, or investment company. Bridge loan references the duration of the loan.

The interest rate of a bridge loan is generally 12-15% for a maximum of 3 years. For commercial properties, the Loan-to-Value ratio does not exceed 65% and 80% for residential properties. Loans can be issued on a closed or open timeframe for payoff.

Banks do not typically offer real estate bridge loans because of the high risk and lack of documentation which does not meet the industry’s lending criteria. A bank would have difficulties justifying its lending practice to government regulators and investors if it issued bridge loans. Therefore, most bridge loans are generated from individuals, businesses, and investment pools.

Bridge loans are used in corporate finance and venture capital as well. They can infuse small amounts of cash to carry a company through consecutive major private equity financings. In addition, they can assist a distressed company while search of an acquirer or larger investor. If a company is being sold, a bridge loan can finance final debt before it is publicly offered.

Lone Oak Fund is a private mortgage fund larger than many banks that makes bridge loans typically ranging from $500K to $12.5M on commercial and residential properties located throughout Southern and Northern California. Founded and managed by experienced real estate developers, Lone Oak Fund is the preferred lender for professionals seeking fast, reliable bridge financing for their clients, while providing an additional profit center.Since its inception in 2002, Lone Oak Fund has become one of the largest and fastest growing private bridge lenders in California. The fund is supported by the financial strength of its 400 plus members, including high-net-worth individuals, institutions, and pension funds, with over a billion dollars in loans funded.

When you work with people’s finances, people tend to me a bit more sensitive than when making purchases of another nature. Whether you’re a financial advisor, banker or offer a financial product, reaching your target audience is more about forming a relationship with them through your marketing efforts than it is accomplishing a transaction. Financial sector marketing ideas tend to come to ways in which the bond can be formed and solidified. Once a year, Senior Market Advisor compiles the top 100 marketing ideas from your fellow financial experts from which you may be able to draw some inspiration.

Pick up the phone every once in a while and touch base with your clients when you’re not actually trying to sell them something. Making contact by phone without the specific intent to give them a sales pitch is an indirect form of marketing. You can schedule your calls for special occasions such as client birthdays or anniversaries or schedule it according to a season such as a “spring cleaning” checkup call. Some of your calls will turn into business because it reminds clients or prospects of some point of business they wanted to discuss with you. If you wish to take more of a direct marketing approach, you can call with a specific financial product or service that the prospect or client may be interested in for their own personal financial situation. In general, though, a more indirect approach can work in your favor.

Either with a letter that goes in the mail or an email blast to your list, send out a letter to your satisfied clients asking them to refer others who may be in need of your financial product or service. Clients who have worked with you know first-hand how you can benefit them, so they are more apt to refer you to other people they know. People who are alike and have like needs also tend to run in packs, so the chances are good that your clients and prospects that fit into your target market know other people you fit into your target market too. It is in human nature to want to help others, so when it comes to financial situations, emotion motivates many clients to refer people to you they know you can help and vice versa.

Many organizations, associations and others seek professionals to speak to their group. Some event hosts pay an honorarium, but others do not. Your goal in booking speaking engagements is not to get paid, but to get in front of groups of people that are your potential clients. Speaking builds credibility because it paints you as an expert in your financial sector. People are drawn to working with the best of the best, so speaking engagements allow you to establish a platform of expertise and provide you with an opportunity to turn attendees into clients. Make sure you have some way of collecting the names and contact information of attendees, such as holding a prize drawing.