The economy is still problematic for many people; businesses and investors are not exempt from the problems that plague many others in the world today. With banks tightening their reins on lending and many business owners unable to secure financing through those sources, what is the alternative—or maybe a better question one might ask is: What is the alternative to traditional financing? Hard money loans provide perfect solutions for those who need funds but are unable to obtain traditional financing or need a quicker turnaround time than they can expect from traditional financing sources. There are several occasions when an investor or business person will find hard money lenders in California solve their funding needs better than traditional financing.
One of the most common reasons people have to seek hard money lenders is because their credit does not qualify them for traditional loans. Without hard money lenders many people would be unable to make investments into business ventures or upgrade their businesses. Without an additional source of funding, these business owners and potential investors will be unable to pursue their needs in the current economic downturn.
Insufficient Loan to Value Ratio
One of the biggest problems investors face in the current economy is coming up with a sufficient down payment to meet the requirement of traditional lenders, especially when the borrower is looking to do substantial renovations on repairs on properties that are currently priced below market value. The difference here is hard money lenders in California will finance sixty-five to seventy percent of the anticipated value of the property. This is a beneficial step for investors who are likely to discover they don’t have to put up any money of their own.
Traditional Loans Take Too Long to Close
Investors quite often don’t have the time to wait for a final decision from a traditional lender—the extended time between presentation of the sales contract to approval and closing can take thirty days or longer. For instance, if an investor finds a great property at a sheriff’s sale, he must usually put ten percent down at the time of the bid and have the balance within thirty days. Hard money loans can usually close within ten to fourteen days thus providing investors with more opportunities for investments.
Short Term Needs of the Borrower
Another reason a borrower might seek out hard money lenders in California instead of going the traditional route is because they only need funding for a short period of time. The borrower doesn’t see the need to go through the long process required by traditional lenders when he or she knows there is no need for long-term financing.
Lack of Proper Zoning and otherPermits
Traditional lenders will not loan money unless the property in question is ready for occupancy or is ready for business operations to begin. These stringent provisions are not the end for investors and business owners thanks to hard money lenders. The reality is where traditional lenders say “no,” hard money lenders say “yes.” This means no matter what the circumstances may be every investor and business owner has a means of obtaining funding for his projects.