Your start-up business might sound good on paper. It’s possible you have a solid plan for the next few years, but none of that will work if you can’t get the capital to launch your business forward.
There are three facts about small business loans every start-up has to accept:
- Start-ups have no chance of approval
- Bank loans are difficult to get
- Interest rates are too high
The solution is to look for hard money loans. These are cash loans but not from a bank or credit union. They also don’t work the same way traditional SBE loans do.
Not sure if cash loans are the solutions for your business? Take a moment to read through the following guide. You might discover how and why these loans will benefit your company’s future.
Not every business gets approved for a loan. Not every business gets the kind of loan they need for a specific project. Even those that do get approved have to undergo a lengthy process.
This is not the case with hard cash loans. The process is easier and simpler in comparison. Very often, it all boils down to the value of the collateral instead of evaluating credit, cash-flow, and growth rate.
Getting started with cash loans is also easier. The forms you have to fill up are not as difficult to comprehend and not as long when compared to bank loan forms.
Even for businesses that do get approval, the process can take anywhere from two weeks to more than a month. That might not work for small businesses that need the funding as soon as possible.
Cash loans have the advantage in this regard. You can negotiate a deal in less than a few days. Once the lender evaluates the collateral property and both parties agree to the loan-to-value ratio, the deal can close.
This is essential for SBE’s because they need money quick, otherwise they could lose their window of opportunity.
Credit Rating Not an Issue
20% of small businesses fail to get a loan and a large majority don’t even know why. The main reason for not getting approved is a poor credit rating.
SBE’s often get turned down because they haven’t had the chance yet to build their credit. They didn’t get the time and opportunity to show repayment ability and build a steady loan-to-payment ratio.
With cash loans, you don’t have to worry about any of this. Hard money lenders won’t conduct a credit check and they don’t care to look at your income rate. The only aspect they’ll look into is the value of the collateral.
This leads into the next big thing: there’s no financial background check.
No Financial Background Check
The collateral means more to the lender than your business’ financial background. They don’t look into cash flow or income rates.
If you borrow and manage to pay off in 12 months, they get their money back and profit from the interest. If you don’t pay the loan, they can take the collateral property and sell it for a higher value. It’s a win-win situation for them.
This is why they don’t need to consider your financial history. It works for them and it’s easier for you to secure the money needed.
Most cash loans have a quick turnaround. You have to pay in 12 months. This is different from private lending and bank loans that can stretch out for a few years.
The great thing about these loans, though, is that you can negotiate a more flexible deal. Depending on the progress you make with the money borrowed or changes to the collateral, you can extend the term to 18 or 24 months.
Hard money loans are also flexible in terms of requirements. While banks only look at your financial history and credit, a hard money lender will give you the chance to present different properties and negotiate different deals at once.
This gives you the opportunity to find the right deal and for the right price. If you have multiple properties to negotiate collateral with, the more flexible your loan can be.
Approval for Deals Banks Won’t Consider
When a bank looks into a loan application, they also take into consideration what the money is for. They can deny a loan application because they do not approve of a business’ financial plan.
Cash loans are not that strict. Very often, the lender will tailor the terms to fit your specific needs. Some of the loans you can get from a hard money lender that banks wouldn’t consider include:
- Fix and flip loans
- Rental house loans
- Construction loans
- Refinance loans
Banks, in particular, don’t consider loans for property flipping. It’s a risky investment on their part. Hard money lenders, on the other hand, are negotiable when it comes to this.
Low Down Payments
You can calculate the down payment by taking into consideration the value of the collateral and the intended loan amount. The ratio between the two values equates to the minimum amount you need to take for the loan to push through.
Compared to bank loans, this is a lower amount to consider. For SBE’s, this is a lower risk in the beginning and will save you cash that you could use as start-up capital.
Apply for Hard Cash Loans Now
After considering all of the aspects of cash loans, don’t you think it’s time your business gets one? Whether it’s to fund an upcoming project or as a start-up capital, it’s the quicker and easier option to rely on.
We can provide hard money loans for you. You can borrow on a property you own or buy a property for your needs. Whether it’s a house, church, retail building, or other, we can use it to negotiate a deal.
Don’t wait now! Give us a visit and we can fill your business wallet with the cash needed to prosper.
Not sure how it works? Do you want to talk about it and negotiate terms? Feel free to give us a call and we’ll put your questions to rest.