Are you looking for a way to improve your company’s cash flow and increase the amount of wiggle room in your budget?
If so, then you might want to consider applying for and receiving a hard money business loan in order to give your company an advantage.
This can help you achieve the goals that you set out to accomplish while having a loan that provides accountability for you and your team.
Here is an in-depth guide about hard money business loans and how you should go about receiving one. Be sure to consider all of the advice given below.
What is a Hard Money Business Loan?
Hard money business loans are, in their simplest definition, a way for business owners to receive their much-needed funds if they don’t qualify for other means of receiving a loan.
In other words, instead of relying on you or your investor’s credit scores, a hard money loan focuses on the collateral that you offer.
In this case, the collateral that you will be offering is tied into your commercial real estate. The more enticing of real estate that you own, the more significant of a hard money loan that you might be entitled to.
While this might be a good option to initially receive a loan, just exercise a bit of caution. Hard money loans can lean on the expensive side, so be sure to discuss all your options and set yourself up for success.
How Can I Acquire a Hard Money Business Loan?
Here’s the million-dollar question of this article. Now that you know what a hard money business loan is (and whether or not it’s a good fit for you), you need to know how to go about getting one.
However, the answer depends on the lender that you’re hoping to receive a hard money loan from.
Some have certain standards that you and your business need to meet in order to qualify. For example, they might want to see a viable company that’s been in business for at least 2 months.
They still might have a minimum credit score that they want you to meet in order to apply. The lender might also want to see a certain amount of monthly revenue in order for you to qualify.
Whatever the case might be, you need to make sure you hit that lender’s requirements before you go any further. Applying for a loan you don’t qualify for is a waste of your time.
If your preferred lender does have qualifications, and you end up meeting them, then they’ll more than likely design your loan based on what’s called a loan-to-value ratio.
If the ratio is too high, then the lender might see it as a higher risk. But fortunately, the commercial real estate you’ll offer as collateral is used to balance out that risk on the lender’s side of things.
Don’t ever expect the hard money business loan to match the exact value of your property.
Lenders strategically set your loan at a certain amount under the value of your real estate so that they can eliminate as much risk as possible for themselves.
It’s imperative that you find the right lender in order to match your business up with the right fit for your company’s situation.
Finding the Right Hard Money Lenders
Now that you know what a hard money loan is and how to receive one, it’s time for you to find the right hard money lender.
Make no mistake about it, hard money business loans aren’t your ordinary business loan offer. For that reason, you won’t find any banks that can offer them to you.
Hard money business loans are offered by private lenders only, so you need to make sure you’re setting yourself up with the right one for your business.
Be sure to use this website to find hard money lenders near you and set yourself up for success.
This will help you receive the flexible spending that your startup needs to succeed. If you want to ensure you’re working with a quality private lender, be sure to find one with control over their funding.
The more experience that a lender has in hard money business loans, the better off that you will be. Be sure to set yourself up with the proper loan amount that you need in the hands of a trusted private investor.
Prepare for High Interest Rates
Perhaps the only “catch” to receiving a hard money business loan is the high interest rates that come with it.
The interest rates on your hard money business loans will almost always be higher than that of a typical business loan.
You might see interest rates that range anywhere from 15-percent to 30-percent while you search for your ideal fit. Don’t be alarmed, it’s not you! These high interest rates are a part of the process.
Again, just be sure to set yourself up with a high-quality lender that you can trust, explain your business’s situation, and it will start a valuable business relationship.
Invest in Hard Money Business Loans Today!
Now that you’ve seen all the details of how to qualify for hard money business loans, it is time to take a look at all of your options.
Be sure to give yourself plenty of time to research and consdier all your options. Think through hard money loans and all other loan types that might be the right fit.
Make sure to browse our website for more articles on business loans, as well as many other helpful topics!