Hard Money Loans

Private Hard Money Lender Means Quick Loan Approval

Written by Harry

When you need money quickly for your business, navigating your way through the mountains of paperwork can be hard. What a traditional lender demands can make a quick loan approval deal untenable.

In this instance, more often than not, your best option is a private hard money lender. You can attempt to go the traditional route, but if your application has been rejected then you should consider a private hard money lender.

Why is it Quicker?

Private hard money lenders don’t have the same regulations as normal lending institutions. Many banks were bailed out during the crash in 2008 and new laws have rightfully ensured that they can’t simply give out loans without fulfilling some strict criteria.

This does protect consumers as well as the banks, however, it can make getting a loan quite difficult. Getting approval from a private hard money lender can be easier as they look at the information available to them on a case by case basis. Your credit score is not much interest to them, your assets are.

“Small- and medium-sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.” Vince Cable, formerly of Shell Oil

A decent private hard money lender will look at what you want the money for, whether they are satisfied that you will be able to repay that debt on their terms and the possibility of a future relationship. Private lenders comprehend the need for quick loan approval. They are usually astute investors who know that time is of the essence in making a good deal, so they will assess your situation quickly.

How Does Quick Loan Approval Work?

Private money lenders can offer you more flexibility in terms than traditional lending institutions. However, in the majority of cases, the length of the loan will be much shorter than normal loans or mortgages. Usually, the terms are around 2 – 5 years maximum, and their interest will be higher. However, they won’t have to refer to a list of stringent conditions or board members who are imposing regulations, and not having to do this speeds up the process.

It is pretty simple to apply for a private hard money loan. First, you will need to present them with your financial data – if that is for your business that you are taking the loan against, or if it is your own personal net worth.

You also have to offer collateral. This is one of the big differences between a traditional loan and a hard money loan. In this case, the collateral is usually the property or asset that you are actually using the loan to acquire. In business, it could be against your premises as you hope to extend or pour money into a new product.

If it’s to flip a property, which many hard money loans are for, then you need to provide information on the property, the area and the potential for profit. You still have to do your homework, they just won’t spend as long scrutinizing it as a bank would. Many private hard money lenders now let you apply online, and some promise approval in up to 36 hours.

Where to Find a Private Hard Money Lender?

Over the past few years, the number of private hard money lenders has jumped. According to the American Association of Private Lenders, there are now almost 40% more since 2016.  So, it’s easy to find one, but make sure you go for a private money lender with a good reputation. You can find a host of both large and small private hard money lenders online. Don’t ignore local ones, but do try and get some referrals.

Private hard money lenders used to be viewed quite cautiously, but times evolve. In a business environment, working capital is required and often a traditional loan process won’t let you access the money in time. It can be beneficial to build a relationship with a private hard money lender to finance deals and grow your business.

Resources:

https://www.bloomberg.com/news/articles/2019-06-12/high-interest-lenders-up-40-even-as-home-flipping-trend-weakens

 

 

About the author

Harry