Monthly Archives: March 2010

Setting up your own business might be a very difficult task. That’s why sometimes getting a business loan is a very good decision. Besides, if you have a good credit, you shouldn’t face any serious difficulties. Of course it’s nice to be a real professional in finance and loans subject. Moreover it’s essential to be a good businessman to run your business. It is a hard task to combine you work and studies. But getting for example an MBA online diploma is a good way out.

Returning to the business loans subject, if your credit is much to be desired, then unfortunately the variety of options is not so wide. It will be rather hard to find second mortgage loan and even harder to qualify for it. As a rule banks won’t help the one with a bad personal credit, so you should find other ways to get some money. Though there are some helpful tips to get a loan in such situations.

First, you should build up your business’ credit when you try to get a loan with bad credit. To start with you should separate your own credit from your company’s one, and then in order to create a good image you should open up accounts in your business name and pay all the bills on time. So from this point your company is a legal entity, because it will no longer be linked to your personally. And that means you do not need to use your Social Security Number to open up any credit accounts for your business.

Though at this point you still cannot get a small business loan. To get the small business loan you need to open up vendor and supplier lines of credit and then ensure that those invoices are paid on time. Once you have built up your credit with these types of accounts you can approach banks about getting a larger loan.

It is very much common to see that mortgage industry insiders often refer to hard money lenders as a last resort. It is true as because borrowers put it to their last choice to go for a hard money loan before slotting through traditional banking institutions. But hard money loans are easier to get and funded at lightning speed. Let us take a look how hard money lenders can be the first stop to borrowers instead of a last resort.


Hard money loans are far better from conventional loans as the guidelines are far different from the local institutions. It is termed as asset based lending as the collateral on the loan becomes the real estate property. Those seeking emergency funding and those with time sensitive situations can opt for a hard money lender as they can close quickly in days. Some hard money lenders do look at the credit history of the borrower, but most do not bother to check the history.

Basically based on their criteria, hard money lenders lend their money on a short – term basis, usually 6 months to 1 year to borrowers who use it for variable purposes. These may include real estate loan types: bridge, refinance, development, acquisition, rehab, etc. The loan will usually vary from private lender to lender in cases like upfront application fee, due diligence fee and commitment fee. Some lenders may fund interest, origination fees, and rehab money while other will not. Once selecting hard money lender will need to go through these options so that you can understand the best possibilities to fit your plans.

Thus there are many benefits to choose a hard money lender to get a hard money loan. If the down payment money is tight and your credit is not perfect, it can be closed in 5 – 14 days. They require minimum of necessary documentation with no problem with poor credit history. The lenders are quiet experienced to fill up the funding gap if any occurs during the project is in progress. This can only take place with the production of proper documents by the borrower. Unlike traditional lenders hard money lenders can give out loans to foreign nationals. Personal guarantees are not require for such loans as the loans are based on the value of the property.

There is always a question as to why hard money lenders loan money when traditional lending institutions do not bother to gamble. This is because the hard money lenders charge higher rates than other traditional lending institutions. Also the lenders require the borrowers to have at least 25 – 30 percent equity in real estate as collateral. Thus hard money loans may be the last resort for many borrowers, but there are a lot of scenarios where hard money lenders are the only way to go in the market.