Laws are intended to protect all parties in a transaction and that includes those specific to hard money lenders in Pennsylvania. This is not something the state government does in order to make it difficult for those who need to engage the services of a hard money lender but rather to make sure both borrower and lender know what is legal and what isn’t. It also helps the borrower choose a hard money lender who is reputable and operates within the scope of the law rather than finding one that is unscrupulous and attempts to circumvent the law.
Be Prepared Before You Open for Business
One of the first things you want to do is make sure you are actually ready to begin offering hard money loans in Pennsylvania. It takes a great deal of knowledge for a hard money lender to be ready to open for business. This means you need to become educated in the laws that affect hard money lenders in Pennsylvania and learn what your potential borrowers need. You can do this in several different ways:
Assessing the area where you plan to do business
Learn what the needs are in the community
Familiarize yourself with the types of commercial businesses in the area
Learn the needs of the residential and commercial community and the number of business owners and managers who might have the need to seek the services of a hard money lender
Become aware of any depressed or other properties that may not qualify for traditional lending
The Importance of Laws for Hard Money Loans
There is a need for laws regarding hard money loans just as there are for traditional loans. No one should take offense or construe this to mean there is any type of unscrupulous activity related to any lending practices. The laws are necessary to ensure that both borrowers and lenders understand the terms of the transaction and are abiding with the law. Some might think it’s a bad thing and that laws insinuate there is something of which to be afraid, but nothing could be farther from the truth. Hard money lenders in Pennsylvania are not loan sharks but honest business people who are helping those business owners who are unable to obtain funding from traditional lenders.
Operating within the Scope of the Law
Once you know the laws that affect hard money lenders you can structure your business transactions around that. Even those who have been in business for a long time have to update their knowledge base to make sure they are following the current regulations concerning financial transactions; many of these laws pertain to both hard money and traditional loans.
Do not fear the fact there are laws regulating hard money lenders in Pennsylvania because their purpose is to protect not just the borrower but also the lender. However, before a hard money lender begins loaning money he or she should become fully educated in the legalities of conducting business within the state of Pennsylvania.