Getting a Hard Money Commercial Loan isn't the simplest task in the world, but in this modern era of technology, it's a lot simpler than it used to be 15 years ago. However, in order to get a loan like this there are certain things you'll need to be aware of, that will make you navigate through the rough waters much easier. Once you read this article you'll be on the pulse of what's going on.
Why Would Someone Want Hard Money Commercial Loans?
The main reasons are that these types of money financing solutions are so notable is the pliability. I've heard of companies offering this type of business loan collectively unsecured, with no collateral. But these loans are under 500k. Business Cash Loans of 500k to One Billion are most frequently backed by Real Estate.
People tend to use these Hard Money Commercial Loans as Procurement or “Bridge Loans". They want to fuse the imperfection meaning they will tend to use this commercial finance loan while they wait for their traditional financing kicks in. The problem with these loans is that they start at rates of 11-16%. This is relatively 5 points more than a conventional loan.
What Types of Hard Money Loans are out there?
You can acquire a loan like this for commercial property. This can be anything from a Strip Mall to a Grocery Store to a small office suite. You can also use them for a residential investment such as a tract home development. I've heard of loans $100,000,000 and more just for one loan of this type. The Industrial Hard Money Commercial Loan is also very popular.
Hard Money Commercial Loans cover everything from Office Land to Technology Parks. Technology parks are becoming more popular in urban and suburban areas. These are basically warehouses and factories. If you've ever been in an area where you'll see a computer warehouse, next to it a warehouse selling motorcycle parts, then next to that a carpet warehouse, that's a technology park.
Hard Money Commercial Loans also go by exclusive factors such as a Favorable Credit Score, Preferable Proceeds and other determinants. This obviously affects rates as well. The more your score, the more your LTV. LTV stands for Loan to Value Ratio which is the prime factor of the value of the property the bank is willing to loan on. When applying for a outrageous loan of this type your Credit Score and tangible history isn't weighted as much as how long you've been in business. Is your enterprise is prosperous, massively prosperous or failing?
The logic the rates on Hard Money Commercial Loans are so high is because they have to listen to the possibility of the borrower going into default. These financial loans don't shield the Investor or the Banks from the large failure rates on behalf of the borrower.
But it's important to note that these types of loans are closed everyday. Business moves on and the world moves on accordingly. When trying to find a lender that will help you acquire money financing of this type, make sure you at least setup an conference. This doesn't have to be an in person interview, since many lenders are nationwide now. A telephone interview should be satisfactory in most cases.
People get Commercial Finance loans at high risk because they tend to make a lot of money regardless, so if you can justify the high interest rates of this type of loan, and can work it out on paper where your company will receive a high profit margin regardless, go ahead and give it a shot!
Whether you're looking for Prime Rates or Commercial Finance Options there is definitely a viable solution for you.
Let Brian Garvin & Jeff West teach you More about Commercial Real Estate Loans and find out more about Hard Money Commercial Loans today. You can always call us for Free Real Estate Advice as we have a lot of resources to help you find what you need, with no obligation.