Commercial Hard Money Loans - 3 Business Scenarios



Commercial hard money loans provide quick cash for investors. These types of lenders provide another an alternative method of financing for people needing to get quick money to invest into short-term projects.  Commercial hard money lenders will use their money to invest into the property. In exchange, you will be assessed a higher interest rate and /or points on the loan. Typical, people will utilized commercial hard money loans as a last resort due being unable to secure traditional funding for their investment. If you are unsure if commercial hard money loans are an option for you, listed below are three business scenarios in which commercial hard money loans would be appropriate to use.

1. Expedited Financing for the Real Estate Investor

If you have found a property that you are ready to invest in and in order to secure it, you need to close relatively quickly. A commercial hard money loan can provide the funding you will need. Unlike traditional loan processing, the closing process is quicker. Traditional loans require a lot of documentation to be submitted. After submission, it goes through several channels and can take up to a month (depending on the circumstances) to get an approval. With a commercial hard money loan, since the lender is utilizing his or her funds, the requirements for approval are less. This allows the lender to make the decision quicker and provide funding.

2. Small Business Owner

If you are opening your own business or investing to own, you may want to utilize a commercial hard money loan to fund your investment. With small businesses, whether opening or investing, it can be hard to get funding due to the risk associated. Small businesses tend to be a high risk because there is no way to know if the investment will have a positive return on investment. The risk makes it challenging to get traditional funding. Most lending institutions want to invest monies into a business that is proven or has a similar business structure to show that it has a high potential to be profitable. In these circumstances, commercial hard money loans could provide the money necessary to get a small business running. While you hope the business succeeds, if it should not provide the return you were anticipating and you default, the investor will use the property as means of repayment.

3. Low Credit Scores Investor

If you are trying to invest or purchase a property, but your credit score is low, a hard money loan can be the solution to your funding problem. The basis in which most people qualify for bank loans is on our credit scores and history. Credit scores are one of the many reasons in which people are denied for funding. If you are trying to invest, but have a low credit score, you may want to consider a commercial hard money loan. The requirements to qualify for a hard money loan are less stringent than qualifying for a traditional loan. Remember, that the commercial hard money lender is assuming the risk by investing and it will cost you more in repayment.

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