Requirements of Commercial Hard Money Lenders
While Commercial Hard Money lenders will focus less on your personal credit score, providing your lender with additional information regarding your personal finances will still be needed. W-2s, paystubs, savings, and credit history will all help speed the process along and get you approved. Even though it’s not the main focus, lenders want to see that you have money in the bank.
Pro Tip: Save as much as you can before applying for a Colorado hard money loan.
Know Your Exit Strategy
Before investing in commercial real estate, you should know your exit strategy. How do you plan on paying back your commercial hard money lenders? Do you have multiple exit strategies in case you encounter personal or real estate market challenges? Your lender will want to see that you have a plan that can be executed should you need to. Below are a few common exit strategies for commercial hard money loans:
- Hold The property long term for cash flow
- Sell the commercial property to pay off the loan
- Sell other investments to pay off the loan
- Refinance the loan to get better terms
Pro Tip: Have a backup plan.
When to get a Commercial Hard Money loan
- You need a loan quickly and you can’t wait several months for traditional banks to decide.
- You need a short term loan to bridge the gap between transactions, known as a Bridge Loan.
- You struggle to qualify for financing due to income, tax returns, unique property, etc.
- You own a small business with expenses that minimize your taxable revenue.
- The loan falls outside of traditional lending parameters.
- Your credit has taken some hits or is impaired.
- Even though you have lots of equity, the property has liens or you have judgments or unpaid bills.
- You have equity in the property that you need cash from.
- You need working capital for your business and know factoring is expensive.
- Your business financials don’t tell the full story of your profitability.
- You need reduced documentation requirements or a stated loan.
- You are avoiding foreclosure or default by restructuring your debt.
- You are a foreign investor and don’t have credit.
- You require a loan that is complex with collateral spread across multiple properties.
- You creative lending solutions that do not fit other lenders’ requirements.
Commercial Hard Money Lenders Need to Know You Are Interested
Are you in constant contact with your lender? Commercial hard money lenders want to know that you are very interested in getting a loan, otherwise, they will move on to someone who is. By remaining in contact with your lender and providing the information they request in a timely manner, your lender will see that you really care, which will help your chances of getting a loan over another borrower.
Pro Tip: Value your lender’s time by returning phone calls and providing the requested information promptly.
There are so many advantages to getting a hard money loan for your commercial real estate endeavor and there is no better hard money lender to work with than our dedicated team at Abbey Mortgage & Investments, Inc. If you are interested in getting a hard money loan or you have questions about if a hard money loan is right for you, fill out our free loan review and loan term options form or give us a call. We look forward to helping you fund your deal!
You can also check some of our other articles out.