Hard Money Loans: Filling in Gaps in Funding
If you are an entrepreneur or small-business owner, or if you aspire to be successful in these career paths, you no doubt understand that achieving your goals is difficult without securing financial help. Seasoned, skilled entrepreneurs and business owners can often get to a position where they have can use their own funds to grow their business. However, for most people, especially for those starting out, getting funding is vital for a healthy business or project. While there are many funding options one can turn to, hard money loans are a source all entrepreneurs should consider.
The following are some guidelines at how these loans work and can help you achieve your business dreams.
These loans are short-terms loans that one can obtain through real estate. Where traditional loans use banks, credit unions or other financial institutions to secure the loan, hard money loans turn to private investors for the funds.
There are a number of intriguing characteristics of these types of loans. To begin with, they can be ideal for real estate investors who need a quick boost of cash to finance an upcoming project. Usually, the terms of these loans are around 12 months. Sometimes, you can extend them to two or three years. To repay the loan, you would make monthly payments in interest and perhaps some principal, and at the end of the loan, you would make a balloon payment.
As opposed to traditional loans or other types of funding, how much you can secure from these loans depends on the value of the property you intend to purchase. In some cases, it may be based on a property you currently own and desire to use it as collateral.
One of the most appealing features of this type of loan is that you can qualify even if you have poor credit. The lender won’t look at your credit score but is only concerned about the property’s value.
Hard money loans are ideal for a real estate investor who is building a business through rehab projects or house flipping, or for someone who is trying to obtain a construction loan. If you need more quickly, and you know based on the value of your property you intend to buy that you will be able to repay the loan within a year, this funding may be perfect for you.
If traditional loans aren’t working for you, don’t worry. You have options with hard money loans.