2 Things About Hard Money That Aren’t Hard at All
Hard money is one of those things that is widely misunderstood by the general public. Most people believe that hard money is last-resort funding for deadbeats who are so desperate that they are willing to sell their souls to get a loan. Such false impressions are not helped by a lack of hard money information presented in terms people actually understand.
The fact is that hard money is pretty easy to understand if it’s explained the right way. To illustrate the point, there are two aspects of hard money described below. They are not hard to understand. They also aren’t hard to work through as a loan applicant. As just about any successful borrower can tell you, the hard money process is one of the easiest in the financial sector.
Without further delay, here are two things about hard money that are not hard at all:
1. The Application Process
Applying for a hard money loan is ridiculously easy. As far as lending goes, a hard money loan could very well be the easiest loan application a borrower will ever submit. Why is it so easy? Because hard money lenders have limited paperwork requirements. They don’t need a lot to do what they do.
Actium Partners, based in Salt Lake City, UT, explains that hard money approval is based primarily on collateral. Lenders are looking for collateral with enough value to cover the amount of money being requested. If the collateral is there, a loan can be approved.
Basing hard money loans primarily on collateral eliminates the need for a whole lot of paperwork. Hard money lenders do not ask for profit and loss statements. They do not require proof of income. By eliminating a ton of unnecessary documents, they can offer a much simpler application process that almost never drags on for days, let alone months.
2. Approval and Funding
Getting approved and funded isn’t hard, either. Hard money borrowers don’t need to have stellar credit. They do not have to pay down their debt-to-income ratio before they apply. They don’t have to bring a long list of cosigners to the table. To get approved, a borrower typically needs two things: valuable collateral and an exit strategy.
Requirements being what they are, approval of a hard money loan can generally be offered within a single business day. There are exceptions to the rule, but it doesn’t take long for lenders to review applications, take a look at collateral, and render a decision. It is rare for a hard money lender to string an applicant along for weeks.
Once approval is given, the only other thing a lender needs to do before closing is prepare loan documents. Funding a loan is a simple matter of getting the documents signed and then electronically transferring the funds. There’s not much to it.
A Loan Option Worth Investigating
Don’t believe everything you read about hard money. It is not a borrowing tool for desperate people who can’t get bank loans. It’s just a different way of funding financial needs.
For the record, hard money is almost exclusively intended for commercial transactions. Some hard money lenders focus on real estate. Others fund business expansions, land development and construction, and even mergers and acquisitions. To entrepreneurs and investors uninterested in traditional bank financing, hard money is a loan option worth investigating.
Hard money isn’t hard to understand. Applying for a loan isn’t hard. Even getting approval and funding isn’t hard as it is with traditional bank loans. All in all, there is a lot to appreciate about hard money when it comes from a reputable lender.