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.

Financial planning refers to estimating the income for the coming years including what are the possible expenses to be incurred and the assets to be acquired, in other words, this refers to the future of the individual or company who invests. This will include the estimation of how much cash is needed and the decision to raise the cash by borrowing or issuance of additional shares within a company. A financial planning program therefore is a series of steps to follow to allocate savings, cash or assets to produce income or projects to increase income like opening a new business or product line or buying or placing shares to an existing business venture or real estate property.

The financial planning program may also involve proper handling and management of the asset management fund including the securities such as the shares and bonds, and the assets to meet the goals set by the investors. Institutions and private investors whose finances are of high net worth should require the services of top financial advisors to be able to understand the intricacies involved in the smooth operation of their investments. The services of these advisors will include analysis of financial statements, asset and stock selection, implementation of the plans and continuous monitoring of the investments.

The services of the top financial advisors are often referred to a collective term called personal wealth management referring to the individual or company investors. Regardless of financial stature, personal wealth management is the foundation of successful life and the basis of being financially stable in the future. It is how an individual handles and manages his financial resources such as his assets, real estate owned, and properties acquired. It is how he acquired and accumulated so much wealth and fortune needed to fund his or the family’s essential needs, preferred lifestyle, and future aspirations. It is the proper management of these finances to reach their life’s goals and be able to retire comfortably.

Retirement planning is also one part of the financial planning program of an individual which refers to the allocation of cash, asset or finances to be used for retirement. It means the setting aside a certain amount of money or other assets to obtain a steady income when one reaches the age of retirement. Retirement planning is important to achieve financial independence when one retires, so that the need for employment by that time will be made optional rather than a necessity for the individual. The process done upon retirement is to assess the readiness of the individual to retire according to the desired retirement age and the person’s lifestyle such as sufficiency of money needed for one to retire and identifying the different actions to improve the readiness of one individual for retirement.