private money lender

Due to your credit history, risk elements of your property, or other reasons, your investment, commercial, or residential loan request may not be approved by conventional lenders like banks because the loan scenario does not fall within their standard risk parameters. In such circumstances, hard money loans come in handy. This article will discuss top six reasons hardy money loans can be a smart choice for you.

What are the benefits that make hard money loans a smart choice?

1. Hard money loans fund projects that conventional lenders will not want to even consider.

There are situations a bank or some other traditional lender would not even consider your loan request. Here are two scenarios:

1.) Fix and flip loans. Fix and flip loans often involve an entrepreneur buying some property, doing repairs and improvements on the property quickly, and then selling the property at a profit. All this is done usually within a short period of, say, 12 months, and it requires short-term funding. Because conventional lenders always prefer long-term loans that will see them collect small interest payments for several months, they often don’t offer short-term loans. So they won’t even consider your application.

2.) Banks are always risk-averse, so under no circumstance will they consider a loan that falls outside their loan risk parameters. A property may have small issues with, for example, plumbing, an electrical issue, or a slight problem with the foundation of a house. These issues can make a bank deem your property inhabitable, hence you won’t qualify for conventional funding. Hardy money loans are always ready to fund such projects.

2. Quick loan approvals and funding.

Hard money loan applications are straightforward and quick. The documentation process is simple as opposed to conventional lenders who require borrowers to fill out countless documents. Again, after the applications, the borrower can wait for up to several weeks before the loan is approved. Now, hard money loan lenders can fund your business within a week after approval. Some hard money loan lenders can save a deal by financing you even within three days.

3. They don’t consider perfect credit scores and your revenue history.

Your credit and income history are one of the first things conventional lenders look at before approving a loan application. Some of the issues that can stop them from financing you include foreclosures, bankruptcies, recent shorts sales, loan modifications, and poor credit among others.

Hard money loan lenders will finance you whether or not you have some of these flaws on your financial history. Often, they only require that you have sufficient equity in your property and an exit strategy.

4. A hard money loan lender is another business partner.

As a matter of fact, most hard money lenders have good experience with your kind of business, and they will always give you the advice to ensure your investment succeeds. In fact, the last thing they want is problems that can put your business in jeopardy thus leading to missed payments and other issues.

Again, experienced hard money lenders will analyze your project and raise concerns that you may not have known about the project. These efforts are often because they know they are in the project with you and want to ensure success because they don’t want to take any loss.

5. They are flexible.

Compared to conventional lenders, hard money loan lenders are more flexible in these three ways:

1.) You might be in need of a short-term loan like the already discussed fix and flip loan, or you could be just in need of money to start a small business. Hard money lenders can quickly provide you with the cash. As noted earlier, they have faster approvals compared to banks. Also, they have less paperwork, and all this quickens funding.

2.) Market environments keep changing, and your investment has to keep adapting with the times. While conventional lenders often take a general approach to all loan scenarios, hard money loaners structure release terms and repayments in a manner that is mutually beneficial to both of you. This factor often results in greater profitability.

3.) Compared to other lenders, hard money loaners are most likely to analyze a problem and reason with the borrower to find the most creative solution that will save the project. This advantage makes them a better choice.

6. No limits.

You might be aware whether or not your credit record is exceptional, but most conventional loaners will not give you a loan if you already have more than one mortgage. Hard money lenders don’t have such limitations as their primary concern is the equity in your property. This makes them a good choice for you, especially if you have multiple projects.

These benefits, among others, make hard money loans a perfect choice for entrepreneurs across the globe.