Never Considered a Hard Money Loan? These 5 Benefits Might Change Your Mind

If you’ve never used a hard money loan before, you might question whether they’re a cost-effective and dependable source of obtaining capital.

While banks might make it seem like they’re the only trustworthy source to finance your next project, a hard money loan through a private lender has advantages that banks and other senior lenders can’t touch.

Consider these 5 benefits…

Hard Money Loans offer Fast Approval

Most hard money loans don’t involve the typical underwriting process of a conventional loan. You provide the required paperwork to the lender and explain your project and needs. They perform due diligence and decide.

This means that instead of waiting a month to find out whether you’ll get the funds you need, you can move from application to approval and have funds in your account in just a few days or weeks.

When speed is essential, hard money loans are tough to beat.

Fewer Credit Requirements Means a Greater Chance of Approval

Hard money loans are secured by property—in most cases real estate. This means that a few blemishes on your credit report won’t impact your chances like they would with a bank.

With fewer regulations, decisions about risk and approvals are left to the private lenders. This means that when you can’t find funding elsewhere, you can might get approval from a hard money lender.

If you’re short on capital from a senior lender, hard money also offers a way to bridge the gap between you and your goals.

This approach is often used in real estate purchases or renovations. Once you’ve improved property values or equity, you can source more senior funding to pay off your hard money debt for lower long-term costs.

Reduced Upfront Cost When Compared to Traditional Financing

Most traditional financing solutions—such as mortgages or equipment loans—require a substantial down payment. If you’re working with a tight budget, this could delay growth and impact success in your venture.

Since they’re secured by property, most hard money loans need less upfront investment. This leaves more capital to apply to your project and reaching your goals.

Simple Structure Means Easy Forecasting and Budgeting

Since you repay hard money loans on a set schedule, there’s no worries about exit costs, early payment penalties and other factors often associated with other financial solutions.

While the increased costs compared to traditional financing might impact future cash flows, the simple structure makes forecasting the impact a loan will have on cash flows easy.

No Worries About Ownership and Equity

As a form of debt financing, your relationship with hard money lenders end when you’ve repaid your debt. There’s no worries about an investor telling you how to run your business, having to clear decisions with a board or maintaining control of your company as you grow.

Want to Learn More?

Hard money loans are a powerful tool when used properly. If you’re looking to learn more about this alternative to traditional financing, check out our Guide to Hard Money Loans. It covers everything from how loans work and requirements for approval to popular uses and examples.

If you’d prefer to talk to a person about how hard money loans might help your business or investment project, contacting one of our analysts is easy!

Just click the button below and provide some basic information about your project and financial situation. Using our extensive network of private investors and institution capital, we strive to find solutions that offer value to every client. Our personalized service means you won’t find an equal experience anywhere else.

This website and blog is a publication of UT Financial Services, LLC. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.

Purpose of this blog is to give general education and information about investing and business financing. Information on this website and blog do not involve the rendering of personalized investment advice. No content should not be construed as legal or financial advice.

Consult a professional advisor before implementing any of the options presented.