Businesses that have gone through an incredibly rough patch that has led to bankruptcy can find it incredibly difficult to stay afloat. Securing loans in particular are very difficult.
If you’ve been looking for lending options for your organization, you would have come across the concept of hard money loans. Hard money loans are a useful lending option since they are versatile.
Here’s what some experts have to say about hard money loans:
Is it possible to get a hard money loan with bankruptcy on your records?
Hard money loans are loans developed to help clients with a poor credit history. Such clients have a high risk of going bankrupt and therefore, it’s very possible for them to get a hard money loan despite having a history of bankruptcy. However, not all lenders will agree to provide you the funds. So while in theory it is possible, you need to find a reliable lender to help you out.
Ideally, look for a private lending company that has a big pool of lenders. The more lenders a company has, the higher their appetite for risk and ability to provide funds.
Limitations to hard money loans
Secured by real estate
Hard money loans are secured loans. Since you’re applying for such a loan due to your poor credit history, lenders will expect collateral. Hard money loans are loans secured by real estate. The real estate in question must hold higher value than the loan applied for as well. If your business doesn’t have such collateral to offer, you’re most likely going to be rejected.
High interest rates
Providing a loan to a commercial client with a poor credit score is incredibly risky for a private lender. There’s a high chance of default. Lenders factor in this additional risk they are taking on by increasing interest rates. Depending on the hard money lender you opt for, you could end up paying a high interest rate on the loan.
Not a long term solution
Hard money loans will help your business survive for a short period of time. This lending option won’t fix the financial issues your company is going through. When applying for a hard money loan, make sure you weight out all the factors, particularly what the future looks like for the company. Inability to do so means you need to either give up your collateral or refinance the loan.
Global Capital Partners Fund is a major private lending company that provides hard money loans in Baltimore, MD. The company has helped many businesses over their 30 years in the industry. Get in touch with their senior partners for more information about their commercial lending options.