Traditional loans have been the main staple of the financing industry for a long time, but they have never been the only option. Banks and other legacy lenders offer good products, but their approval times are long and their requirements are often stringent enough to stifle small businesses. Whether you are looking for a short-term lending solution or a long-term loan alternative to traditional loans, hard money loans provide a few advantages you can’t get from bank loans. They come in a variety of structures and interest rates because hard money just means it’s a loan from a private lender. That difference can be huge, though.
Credit Ratings Are Less Important
The biggest issue with access to business loans is usually not bad credit, it’s a company that has no credit. Sometimes, even with a good score, the company just hasn’t been operating long enough to qualify. Both of these things stop being issues when you work with a hard money lender. While credit ratings are still considered in the application and approval process, they are less important because of the way hard money loans emphasize the value of the collateral.
Terms Are More Flexible
Private lenders are often able to put together customized loan packages, balancing your need for term lengths or maximum down payments against their risk by adjusting other parts of the loan’s conditions. This avoids the programmatic menu often found with traditional lending and allows you to directly negotiate the loan you need, from amortizing term loans for assets to bridge loans that close quickly so you can focus on your investment strategy. Not every lender is flexible, but they are still incentivized to offer a wide range of hard money loans in popular lending structures.
Private Loans Close Quickly
The determination time for private loans is often measured in days, not weeks. On top of that, there are a lot of options designed to approve and close as efficiently as possible. This is easier to do when the loan depends mostly on collateral value and income verification, which is how most hard money lending works. Private lending firms also tend to have simpler management structures and a more efficient workforce, so there are fewer people for approval to pass through. They just check out your information, run the numbers, and make contact. That speed and ease of use often make hard money loans the best choice for the short term even when you want to refinance into a more traditional product later.
Are you looking for financing options for your business? If so, Synergy Commercial Funding is ready to help. We offer a wide range of commercial finance services to help businesses of all sizes achieve their objectives, whether it’s purchasing new equipment or purchasing a new commercial property.
Interested in creating a second line of income just by talking with your existing network? Want to help the economy grow by helping businesses around you grow? Think about becoming a Synergy Commercial Funding Partner. Visit our "Referral & Broker Program" to learn more.