If you keep getting turned down for regular business loans, you don’t need to give up on your small business dreams just yet. Another option for financing your business is through a hard money business loan. These loans are often riskier than traditional loans, but can be very effective in case of financial emergencies or the inability to secure financing elsewhere.
While most loans are based on credit scores, hard money loans are based primarily on collateral. That’s why they’re called “hard money” loans, because they’re based on hard assets like property, rather than credit ratings or other financial measurements. Your credit score is largely unimportant in securing a hard money loan, and there are fewer regulations and rules for lenders. Almost anyone who has extra money can be a hard money lender, so you should always do your own research to ensure they are a reputable lender with a history of legitimate business loans.
You can get a hard money loan by offering up your assets as collateral to the lender. You usually cannot secure a loan for the full amount your assets are valued at. Instead, the loan amount is usually determined by a percentage of the value of your assets. For example, if you have business assets worth $100,000, a lender might offer you a loan of 75%, or $75,000. Percentage rates vary from lender to lender, so you may want to explore all your options before deciding on a hard money loan.
Hard money loans are often easier and quicker to secure than traditional business loans, which makes them attractive for business owners who need fast cash for financial emergencies or time-sensitive business decisions. However, they also usually carry higher interest rates and are riskier than other loans. If you were to default on a hard money loan, you risk losing your entire business and all your assets. Hard money loans can sometimes be the best choice for certain situations, but you should always exercise caution and ensure that you will be able to pay the loan back on time.
Hard money loans are an option for business owners who are in an immediate financial pinch and cannot wait to be approved for a traditional loan. These business loans are also useful if you have a poor credit score and don’t have the time to rebuild your credit before launching your business. Hard money loans are easy and fast to get, and can be extremely helpful for business owners in certain circumstances, assuming you can accept the high interest rates and risk of putting your assets up as collateral. For small business owners who cannot get loans any other way, hard money loans should be carefully considered as an alternative form of financing.
Contact us today to obtain a Hard Money Loan for your business!