Are you trying to get a loan to flip houses? Or need some quick money to finance your new startup business? Some people aren’t able to get a loan for their new business no matter how excellent their business proposal is. Well, you might apply for a hard money loan. Learn more about how hard money loan financing can solve making your business idea come to life.
Why Choose Hard Money Loans
Those trying to start a flipping house business or need funds for a new startup might consider hard money loans. You don’t have to stop your efforts to provide financing for your business since you have this other option.
It’s easier to be granted a hard money loan than to get accepted by a bank or other traditional loan. As reported by the Senate Committee on Banking and Financial Institutions, “Hard money lenders typically lend to borrowers unable to obtain credit elsewhere, or to borrowers who need money more quickly than traditional lenders can fund a loan.”
Most traditional money lenders take too long approving your application. You might not want to waste a whole month waiting when you can start almost right away.
However, hard money loans are a lot quicker to get accepted. People usually have a higher success rate with this loan. Having a great business plan will go a long way in getting accepted faster.
Who Gives Out Hard Money Loans
Some people have to resort to other options to finance their new business like an individual or group of investors who lend out hard money loans. These loans might be your only option if you have an eye on an expensive property or a risky one. Having too much construction to work on or some other obstacle might make traditional lenders hesitate. These hard money investors are used to putting their money on the line on high-risk business situations.
Not all investors will seek those high-risk investments. What will really help get your application accepted faster is if you draw up the perfect business proposal. Organizing the best business idea that shows the least amount of risk for your investors will get you accepted more than a sloppy one. It needs to portray how you will make a quick profit, especially if you want to repay your loan on time.
You can compare different financing companies to get the best deal for you and your business. The lender and loan term can also play a factor in how much they will allow you to borrow. You should make sure you borrow enough money for construction and all the other expenses you haven’t thought of yet. This is where extensive research can help you figure out how much to ask for.
Does Your Credit Score Affect Your Approval?
You don’t need a good credit score to be approved for a hard money loan. As stated by Senate Committee on Banking and Financial Institutions, you don’t need a high score to get hard money loans. Therefore, this loan can be perfect for those who have an excellent business idea but don’t have the credit history to back it up.
Drawbacks of Hard Money Loans
What’s the catch? There are some drawbacks to getting a hard money loan. First, offering your property as collateral, whether it’s your house or another property you own. Something has to be at stake for them to accept your offer.
According to Senate Committee on Banking and Financial Institutions, hard money loans usually have higher interest rates and points added to your final loan. You also don’t have the luxury of a long loan length. You have to repay the lender within a smaller time frame than traditional loans.
It all depends on the particular deal you made with your money lender. So, be absolutely sure your new business venture is successful and will make the profits to pay your loan back.
Don’t Let Financing Stop You
Don’t let your business proposal gather dust when you keep getting denied. Instead, seek hard money lenders to help finance the business you’ve always wanted. Go over the benefits and drawbacks of hard money loans and see if it works for you. Take action now by researching the best hard money lender today and applying for a loan that will change your life!