Hard money lenders, also known as private lenders are preferred over traditional bank loans because of their quick turnaround time. Loan applications are processed quicker and the lender’s requirements are fairly straightforward in comparison. While there are many benefits to private lending, it’s still important to choose the right private lender. Private lenders with many years in the business are able to draw up loan agreements that are beneficial to both parties.
Here are some tips to choosing a private lender for commercial purposes:
Commercial clients typically use hard money loans for real estate investments since they are approved much faster. However, not all hard money lenders have enough experience with such investments. They could either be dealing in hard money loans for businesses struggling and requiring funds as a last resort, or be new to private lending as a whole.
Look for private lenders who have lent to clients for real estate investment purposes. Such lenders are better at evaluating the collateral provided to secure the loan, i.e. real estate. Before signing up for a hard money loan, have your collateral evaluated by a professional to ensure both parties are on the same page. Certain lenders have a reputation of undervaluing a client’s property to make a profit.
Insist on transparency
Never sign paperwork without reading all the terms, the “fine print” as it is called. Unreliable private lenders tend to add clauses to the loan agreement that make the loan more expensive to earn more money. Read the loan agreement word for word and discuss anything that’s unclear. If you are feeling coerced into signing the agreement, or that they aren’t catering to your queries, it’s a red flag!
Research private lenders in the area
When looking for a hard money lender, never go for the first one you come across. Hard money loans are a major decision of a business and you should do your due diligence by researching the market first. This gives you a better idea on the loan terms, payback period, and interest rate being charged. Compare the benefits provided by the lenders and choose the one that offers a better rate and flexible terms.
Flexibility with terms
While certain lenders are quite stringent with their loan terms, there are private lenders in the market that draw up flexible loan agreements with clients. Try negotiating a lucrative deal for your business. Additionally, you could also discuss a renegotiation of terms in future. Private lenders are more interested in getting their money back along with interest over acquiring your collateral, which is why they are known to be more flexible than traditional banks.
If you’re looking to finance your real estate investment with a reliable hard money lender, get in touch with Global Partners Capital Fund. The company has been in the private lending business for over 3 decades and offer a wide range of financing solutions to help your business out. Their services include hard money loans, bridge financing, asset based lending and much more. Call +1-800-514-7350 to speak with their agents.