Commercial Mortgage Lenders – Hard Money Loans

If you are starting up a new business or wanting to expand an existing one, chances are you will need financing. Whether looking to buy property, machinery, material, or other high cost items, getting the financing to do so can be tough in today’s economic climate.You will find this to be especially true when trying to go through a traditional bank. Even if you are able to get the funding that you’re looking for, you will be waiting for months before the loan finally gets funded. In the recent past, the number of borrowers that have defaulted on their loans has risen drastically. For that reason, banks are being much more cautious before financing any business venture. They are going to be very picky when they do credit checks. If there are any issues, they are going to be quick to turn you down.

Fortunately there are still options for getting financed. Due to the banks refusing to provide funding in today’s economy, a lot of loans are being privately funded. Many private lenders will lend their own money for their own portfolios. These lenders are generally funded by hedge funds or wealthy individuals with large pools of capital. The breakdown of the collateralized mortgage bond market has not crippled these unique lenders. Originating loans is not an issue for them because they don’t have to worry about who may or may not want to buy them. Another benefit to private loans, or hard money loans is that they take a very short amount of time to close, as opposed to conventional loans which often take a few months to fund if you are even able to get the approved. You generally don’t have to worry about a loan committee or huge stacks of paperwork. There are no complex ratios to deal with either. If they like your deal and you have shown them that you can pay back the loan back, then usually they will close your loan no matter how things are going in the conventional marketplace.

Do not get discouraged due to the fact that the conventional mortgage industries aren’t willing to offer financing because there are plenty of commercial mortgage lenders that are able to fund your deal

What Is a Special Finance Auto Loan?

Perhaps you have seen the term ‘special finance auto loan’ online when you were shopping around for car loans. If you are not familiar with the term, what it means is that auto loans are available to people with poor or bad credit. The most recent statistics tell us that sixty percent of all consumers have less than perfect credit. These consumers are not typically allowed to borrow money from traditional banks because banks check credit ratings and flatly refuse to loan people with bad credit money. People with bad credit are considered to be ‘special’ cases, so hence the term special finance auto loan was contrived.

Special loans for auto finance are widely available today. As the economy has taken another turn for the worse, more and more people are struggling financially. Many people are falling behind on their bills and cannot pay off their credit balances on time. This leads to the fall in their credit rating, making it impossible to buy a new car, as traditional banks refuse to lend them money. However, thanks to the special finance auto loan the typical consumer who is having money troubles can drive the car of their dreams, as many lenders have emerged over the past couple of years offering to lend money to ‘high-risk’ individuals.

While a special finance auto loan may be convenient, it does has its pitfalls. The interest rates for this type of auto loan can range anywhere from 5 to 26% which is quite high and higher than what is charged by traditional banks. Another negative aspect associated with the typical special finance auto loan is the fact that the down payment required for this type of loan can range from 20 to 50%, which is also high.

Another thing that happens with the typical special finance auto loan is the fact some car dealers will inflate the prices of the cars they offer under this type of financing. This type of dishonest dealer will take a car worth $5000 and jack the price of it up to $10,000. The dealer will then require a down payment of 20% and finance the balance at 25%. The unfortunate buyer (who is often quite desperate) will then be tied into a contract with a very high interest rate on a car that is only worth half of what they paid. Plus, quite often this buyer will default on the loan which will ruin their credit even more. If the buyer is able to make the payments on the special finance auto loan they will have paid double the amount of what they would have had to pay for the same car purchased from an honest dealer at a fair price.

For the consumer with very poor credit, a special finance auto loan can seem like a God-send. A person will be able to borrow the money they need to buy a car. However, they will be paying a high rate of interest and will also have to pay a large down payment. The lenders offering this type of loan are making a whole lot of money, lending money to people with poor and bad credit, and they seem to be appearing out of nowhere as more and more websites are being added to the Internet daily.

Hard Money Loans – And Other Non-Traditional Methods in Obtaining Financing For Your Business

A hard money loan allows the borrower to receive a loan based on the value of real estate he or she owns. The real estate is used as collateral. These loans are issued at a much higher interest rate than conventional loans and are not given by any commercial banks but instead are arranged by private investors.

Since the Hard Money loans are made by private investors a borrower’s credit score is not consider due to the fact that the loan is secured by the value of the property that is being put up as collateral. However, with the current state of the real estate market, hard money loans are not that easy to obtain these days since the real estate market has soften and property is selling for far less than what it was a couple of years ago.

Below are a couple of other non-traditional ways to get financing for your business:

Credit card factoring or Merchant advance for small businesses
Credit card factoring also known as a Merchant advance is when a lender gives your business cash upfront based on your future credit card sales. It is paid back by using a percentage of those future credit card sales until the balance is paid in full. The actual amount that the borrower can receive is based upon the business’s monthly credit card receipts.

General requirements for this type of financing:

o You must have owned the business for at least 6 months
o Your business processes a minimum of $2,000 or more in monthly Credit Card sales
o You have no unresolved bankruptcies
o You have at least one year remaining on your business lease

Account receivables or Invoice factoring

Another popular method of business financing is the selling of Account Receivables or Invoices. Businesses that extend credit terms to their customers ie: net 20, or net 30, allows customers some breathing room to pay their bills, however, this arrangement make it necessary for businesses to wait for payments and can sometimes have a stifling affect on cash flow.

A factoring company purchases receivables or invoices by providing you with a cash advance, thus, infusing your company with immediate cash, improving its financial situation. This advanced is any where from 70% to 85% of the value of the invoices or receivables. Most factoring companies charges a fee starting from 2% and it goes up from there.

So, if your business has been decline by traditional lenders, don’t despair help is on the way through these alternative financial sources.