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Business Financing through Private Hard Money Lenders

In the course of doing business, sooner or later, a company may find itself in situations that prompt it to find financing quickly without having to subject itself to the drawn-out lending process of conventional lenders such as commercial banks and real estate mortgage lenders. A hard money business lender is ideally suited to help businesses in these situations. Even if the deal is complicated, a professionally run hard money business lender can be expected to have the  flexible guidelines to accommodate them.

Underwriting of Business Hard Money Loans

The underwriting and funding of a hard money business loan is pretty straight forward. Depending on the borrower’s situation and the property’s equity position, a private money business lender can quickly present financing options without much delay. The turnaround time on these business loans is generally a few days from the date of submission of full details. The procedures followed by these private lenders are geared for speed and quick decision making. So no matter what the final lending decision the underwrite makes, the borrower will know about it soon enough.

Types of Hard Money Financing for Businesses

All types of businesses across the service and industrial sectors are eligible for business financing. A business hard money loan can be structured to provide most suitable and sensible solution to any financing situation including: acquisition of a competitor, purchase of commercial properties for expansion, refinancing existing debt, buying equipment and machinery. Many businesses might also need financing to take care of working capital requirements and situations prompted by temporary cash flow problems.

Why Opt for a Hard Money Lender?

Business hard money loans also can be an absolute necessity for companies facing tough economic climate and deteriorating credit situation. When banks and other financial institutions fail to approve a loan due to the unsuitability of the business profile of the company or its assets, then the only option left is to approach a unconventional lenders who lend out hard money loans.

In the past hard money business lenders have successfully helped businesses with chapter 11 bankruptcy reorganizations, debt refinancing, inventory and trade financing, corporate turnarounds, cash flow solutions, short-term commercial bridge financing, lines of credit and management buyouts.

A lender will be able to quickly process and approve a business loan, if their business lending requirements are met.  The loan terms might look a bit steep for companies that aren’t used to this form of lending. The interest rates on business hard money loans range between 10 to 20%. The loan term is relatively short compared to conventional real estate or business loans. The fees and points charged at the closing can be negotiated well ahead of time. This helps a company to compare with other offers or proposals made by other private lending sources.

Working with a Hard Money Business Lender

A large number of lenders who make hard money financing available to businesses prefer real estate and other such tangible assets as collateral. Business hard money lending is more or less similar to other asset-based financing solutions offered by private money investors.  The complexity of the borrowing company’s business operations play a role in the type of financing proposed. Lenders can provide financing in the form of senior debt, mezzanine and bridge commercial funding, equity capital, joint ventures and balance sheet financing.

Due to the extra complexity involved in processing a business loan, hard money lenders prefer to work with brokers who will co-ordinate all aspects related to the lending process with the business owner. A preliminary broker analysis with lay out all the factors that need to be addressed or gathered before submitting a business loan package to the commercial hard money lender. A person such as CFO who is responsible for financing aspects within the company is best suited to interact with the business hard money company or the broker handling the business loan.