Private lending is an industry that has boomed in the past 3 years. The stringent rules and regulations of the banking industry have led to this increase in demand for private lending. Conventional loans take months to process and are often rejected.
Hard money loans are a great alternative to traditional loans. It allows clients equal access to funding. If your business is considering a hard money loan, here’s everything to know about it:
Hard money loans are asset based loans
Hard money loans are a form of asset based lending. Asset based lending is secured lending. The borrower provides the lender with appropriate collateral. With hard money lending, the underlying asset must be real estate. In the event of nonpayment of the loan, the lender gains access to the real estate.
To protect the lender, the real estate provided as collateral must be of higher value than the loan required. Let’s say you require a hard money loan that’s worth $100,000, the value of the real estate you offer should be $130,000 or above. This however, does vary from one lender to the next.
Hard money loans can be flexible
Hard money lenders have many years of experience in the business. Over the years they have learned the expertise of lending money and making a profit in a short amount of time. Within this time they have also learned how far they can stretch when it comes to the terms of the loans. You can therefore, try to negotiate terms so that they are suitable to you.
Hard money lenders can extend the period of your loan if you require more time, and you can renegotiate terms if you are struggling to pay up.
Credit does not matter to hard money lenders
In the conventional market, your credit report determines a lot about your loan application’s acceptance. Traditional lenders are wary of clients with poor credit as well as those with a number of loans to their name. Hard money lenders, however, don’t consider your credit rating. They are there in the market to fill the void by providing loans to clients that conventional banks reject.
Higher interest rate for quick funds
Hard money loans are most commonly used because of how quickly you can get hold of financing. The documentation required for this kind of a loan is far less in comparison to that required for conventional loans, making the process simpler and quicker. Each loan application is independently considered and a single agent signs off on the loan. You can therefore get the funds in just a couple of weeks. In return for quick funds, however, hard money lenders do charge a higher interest rate to clients.
Global Partners Capital Fund is a reliable private lender you can get in touch with for hard money loans in Las Vegas, NV. The company has over 30 years of experience as a private money lender. Their services include private lending, financing for mergers and acquisitions, asset based lending and much more. Call +1-800-514-7350 to speak with their agents.