Hard money loan

Hard money loan is the last hope of getting money in case of emergency. When other source of getting money is closed then the only open way is lending hard money.

The most important component of a business is capital. In fact capital is the base of the business particularly for a real estate business. Attaining this capital is not so an easy task, if you are not getting it ready-made. Lack of good capital money may make you unable to develop your business and ultimately your business may be non-operational which will lead to a financial loss. At this critical situation you need capital money for reconstruction of your business. A flow of cash money can nourish your business to stand up. To acquire this capital money a commercial bank is the choicest selection. So as usually you take a stance for a loan to a bank queue. But after a few consecutive visits you feel embarrassment due to many rules and paperwork, which will take you out from the line of interesting a loan. According to their legislation a commercial bank is authenticate for a loan after confirming a diverse features like credit value, refunding capability on due time, you previous loan history, a constant income and so on.

Usually an investor who wants to buy a property at a cheap rate within short time need a quick feedback from the lender but the traditional banks are going with an official procedure and maintain all of the procedures and rules of their organizations. That’s why it's not possible to get the loan in a time of short period which results in losing the property and thus the investor loss the business. Moreover, sometime bank creates some questions on lending the money or have another type of problems like a constant income or document error. That’s why the investor chooses the way of hard money lending.

But as the hard money loan have some very adverse effects like very high interest rates (12-18%), lower ‘loan to value’ (50-70% of the collateral property), short term loan and some hard terms, investors should not jump to the option of hard money loan without a judicious decision.

Sometime few local banks also provide a fast loan depending on the client. So it’s better before trying a hard money loan try to a commercial bank of your well known. But make a good relation with both of them to keep option of getting money from both sources.