Hard money lenders provide commercial financing options to borrowers as compared to banks and other lending institutions. Most of these private lenders provide very fast and easy access to a variety of financing options with greater flexibility offered to their customers.
Besides, increasingly tighter and more stringent bank norms have made commercial borrowing more difficult for businesses than ever before. As a result, there is growing reliance on hard money lending for commercial real estate funding, which has led to a rising demand for private lenders.
What are hard money lender and what they do for you
It can sometimes be very hard to find the best possible financing options, especially when you have started a new business. Despite the availability of traditional sources of financing through banks, venture capitalists or angel investors, it may still not work in favor of your business.
Most of these lending institutions, such as banks, may take a long time to approve your loan and require you to undergo a stringent process of evaluation.
At the same time, banks are not as willing to take risks on new businesses and may adopt a more cautious approach, when approving loans.
Most of these commercial lending institutions take a lot of factors into account, such as credit scores and repayment capacity that leaves for less chance for loan approvals.
Moreover, there are other challenges of bureaucracy and administration involved that may lead to delay in processing commercial loans. On the other hand, a hard money lender does not rely entirely on credit scores or the credit-worthiness of the individual borrowers. Instead, these lenders choose to look at other important factors such as cash flow of the business and the monthly bank statements or accounts receivable. This can increase your chances of having your loans approved, even if you do not have high credit scores and provide easy and instant access to commercial loans for your business.
Following are benefits of hard money business loans
Fast And Quick Approval Of Loans
Unlike other traditional sources of banking, hard money lenders do not place as strong an emphasis on having high credit scores for individuals. They depend more on the asset valuation and take the loan to value ratio into account, while giving loans.
The process of documentation is also quite simple and not cumbersome, that makes it easy to approve loans in just a few days, as opposed to weeks or months, and makes it quick and easy to obtain loans.
Provides Greater Flexibility To The Borrowers
A trusted hard money lender can provide quick assistance to obtain hard money loans to buy a property or even start a small business. This increases your chances of seeking loan approval faster with such private lenders as compared to banks and other institutions, despite having marginal credit scores.
With better lending terms and less paperwork, you can be assured of getting loans on time. Most of these hard money lenders accept different kinds of collateral. Thus, you can choose to use your own home or even future cash flows arising from a property as collateral.
Less Restriction Norms For The Borrowers
Most of the commercial banks need to strictly adhere to the rules laid down by the Federal Reserve and have their own banking policies. This makes it extremely difficult for the borrowers to seek loans from such institutions due to the resulting delays through checks and loads of documentation.
On the other hand, hard money lenders have their own set rules and regulations that makes it very quick and easy to approve hard money loans for borrowers.
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