Traditional lending is beginning to lose some of its power among commercial and residential investors. Finding hard money loans in California is often preferable to going through the red tape involved in securing a traditional loan. Residential and commercial investors are looking at many different properties at any time during the week and do not have the time it takes to wait for a traditional lender to make a decision in their favor. With lending policies tightening up investors are forced to seek funding from sources that are more timely and tuned into their ever changing needs.

Traditional Lenders vs. Hard Money Lenders

What do you really need in terms of funding? How quickly do you need the cash? These are questions that may help you determine whether you should attempt to seek the services of a traditional lender or eliminate that option completely in favor of a hard money lender. Some of the things you may want to consider while weighing your options include the following:

  • Amount of cash needed
  • Turnaround time requirements
  • Purpose of the loan
  • Income documentation
  • Credit qualifications 

Analyzing each of these factors will allow you to make the decision that is right for you in your current situation.

Do You Have Time to Wait for Traditional Financing?

One of the most important things to consider is the amount of time you have to wait for a loan to go through. If you’re looking to close the loan in less than a month, you will want to look into hard money loans in California instead of looking into traditional lending. In many cases traditional loans take sixty to ninety days to close, and many commercial and residential borrowers need a source of funding that can close much sooner.

Purpose of the Loan

If you’re looking at depressed properties, you will have better luck funding your project with a hard money lender. Most traditional lenders are not interested in loan money against uncertainties, and you will be able to obtain substantially more funds through hard money because the loan to value (LTV) will be based on the anticipated value after you complete the work necessary.

If Your Credit Isn’t Perfect Hard Money is Your Best Option

Most lenders today are looking for those who good or excellent credit. These stringent requirements leave many potential investors standing out in the cold—or it would if hard money lenders were not available to take on those who cannot obtain traditional financing. This is a benefit not only to the investor but also to the local economy that will benefit from new business and jobs for local residents.

Lack of Income Documentation Eliminates Traditional Lenders

Is your business venture fairly new? Do you have any proof of its profitability? If your business venture is not yet showing a profit and/or you haven’t had to file a tax return yet, you will more than likely need to pursue hard money loans in California instead of attempting to secure traditional financing. The newer restrictions on traditional funds make it very difficult for new ventures to obtain financing. The good thing is hard money lenders are there to help those who cannot obtain traditional financing.