Commercial Hard Money Loans for Your Short-Term Capital Needs
When we talk about “Hard Money” in the commercial world, we are normally talking about opportunity costs. There is an opportunity that exists and we want to jump on it while it is still available before someone else does. We may also be talking about a scenario in which we have to bridge a gap between where you are right now and where you want to go. That is why hard money loans are sometimes referred to as bridge loans. They are in essence the same type of financing a commercial business can take advantage of including when they flip homes or office buildings.
Banks usually look at the last three years of financials to see if there is proper cash-flow and collateral needed to fulfill their lending requirements for a project. When the financials are not currently sufficient or have not been sufficient for a long enough time period to appease the bank this will usually result in a turn-down. This is exactly why “hard money” commercial financing exists.
Hard Money Loans Offer More Opportunities!
Hard money is available for those opportunities that come around when there might not be sufficient cash-flow and the property or business is not what we call “performing”. Basically “performing” means that the investment or business has enough cash coming in currently to pay the debt and other expenses associated with it. Banks only lend on “performing” properties or businesses. You have to prove to them through financial statement (usually tax returns) that your investment or business is performing before they even consider the loan.
Non-performing or under-performing investments or businesses do not have sufficient cash-flow currently and require another type of financing which we would call hard money. This is money used to transform an investment or business from non-performing status to performing status and needed only for a short period of time.
It is usually interest-only and for a six month to three year time period because it is only intended to be a short-term fix. The investor or business owner can then secure long-term financing once the project is sufficiently cash-flowing thus going from “non-performing” status to “performing” status.
3 Easy Steps to Secure a Hard Money Loan
Hard Money Financing Through ICA is the Solution
We underwrite your file quickly and don’t waste time on term sheets like the banks do.
As soon as we obtain the necessary documentation we start the closing process.
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