Escaping financial troubles as a business is almost impossible. Unprecedented conditions, like the COVID-19 pandemic, led to cash flow problems and losses for most businesses. These financial problems have led to widespread unemployment, shutting down of businesses, or and pay cuts for employees.
Hard money loans are a great way to finance a business. They’re a non-traditional and alternative source of financing, but can be highly effective in helping you meet your short-term needs.
What are hard money loans?
These loans are asset based loans used by businesses when obtaining bank loans is difficult. The banking sector is highly-regulated and tends to favor businesses with a good-to-excellent credit rating. This, inevitably, means companies with a poor credit rating and small businesses don’t stand a chance.
If a project comes up and your business requires quick financing, hard money loans can help you obtain the funds you need to avail this business opportunity. Hard money loans are provided by private lending companies; one such lender, Global Capital Partners Fund, has helped many businesses in Provo, UT with hard money loans.
How to qualify for a hard money loan
Unlike other forms of credit provided to commercial clients, hard money loans are not based on the creditworthiness of a borrower. These loans are based on the value of the collateral you provide. Hard money loans require real estate and hard assets as collateral. The value of the real estate should be higher value than the loan you’re hoping to obtain.
Certain hard money lenders also allow clients to provide collateral that’s a certain percentage of the required loan. If borrowers fail to repay the loan, the collateral is taken over by the hard money lender. Businesses need to make sure the project they’re investing in can yield enough profit to make the scheduled payments.
Interest rates on hard money loans
These loans tend to have a higher interest rate than traditional ones. The risky nature of hard money loans requires higher interest rates to offset it. However, when businesses are in dire need of financial assistance or have time-sensitive financial decisions to make, hard money loans are an ideal choice.
Depending on the hard money lender you get in touch with, you can negotiate favorable and flexible loan terms. Certain private lenders have specific loan agreements written out for each commercial client to suit their needs.
Global Capital Partners Fund is a renowned private lending company that provides hard money loans across the country. 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 like bridge financing.