Hard Money Business Loans
If you are seeking to build or purchase some type of commercial real estate likean apartment complex or strip mall, you will need to apply for hard money business loans. When you apply for hard money business loans, you better have all your financial documents prepared and provide the lender with all the information they need in order to finance your project.
A hard money lender is not a traditional bank lender. They are a completely separate lender and their clients are higher risk from a traditional borrower. The interest rates will range upwards of 20% compared to the 15% you can acquire with other lenders. Most of the lenders that offer hard money business loans are helping clients that are close to financial distress on your commercial real estate venture. Here are some of the things they will consider when they are considering you for hard money business loans:
Corporate credit rating. This shows a lender how you have handled your previous debts and how you have repaid them in a timely manner.
Business plan. What is your business and how are you planning to make money? Since you are dealing with commercial real estate, you need to have other businesses committed to the building and leasing space. This shows the lender your investment is not going to lose money.
Financial projects. Provide the lender with financial projection so they can see how timely you will be able to repay the loan.
Hard money business loans are short-term loans with high interest rate and should only be considered as a last resort. If the interest is so high, why opt for it? Its much easier to acquire and repay short term, loan than to try and find a partner or investor for your business. You will lose some control over your business when you acquire a partner or investor, which may not be the route you want to take.
Search for financing with several different lenders. You need to expect closing points and make sure you are getting a fair deal. Ask the lender about their experience in the hard money lending industry and how many businesses they have been able to help.
Hard money lenders are typically found through the form of hedge funds and private equity groups. You may need to give up a little bit of control, but its rare that you need to give up complete or partial control of your business.
by: Andy Kyle