So you’ve found a great deal but you need the funds to actually realize your project. It’s worth it to stop, take a moment, and think about how you plan to present yourself and your project to a lender before you step foot in their office. Here are four tips to keep in mind when you prepare your loan request, especially geared towards applying for a hard money or private capital loan, where personality and presentation can have a big impact on the final outcome.

1. Create a personal financial statement. Take a step back and look at the bigger picture of your financial situation and if you have consumer debt that isn’t financing an investment, pay it down. Even though private capital lenders won’t be as concerned about your debt-to-income ratio as a bank lender, it is still important to show them that you are reliable and willing to pay back what you borrow. You should also be aware of your credit score and any issues in your credit history. While private capital lenders won’t base their decisions as completely on credit scores and history as bank lenders, they do still take it into consideration and they will want to know the stories behind any bankruptcies, foreclosures, or other bad debt in your history.
2. Write up a prospectus outlining your real estate investing experience. If you don’t have direct experience in the field, then explain how the experience you do have is relevant or how you will work with others who have the experience you might lack at this point.
3. Establish yourself as trustworthy. Submit all relevant documentation with your initial loan request and be upfront with your lender about any potential issues with the property you want to secure the loan with. Show them your passion for your project when you meet with them to talk about the loan request. One of the main differences with private capital lenders is that you get to talk directly to the decisionmaker rather than meeting with a middleman who reports to higher-ups or a committee who you never see face-to-face, so let your lender know that you believe in your project and you have the drive to see your vision through.
4. Make your application coherent. A confused lender is much more likely to reject your loan application, regardless of how good the financials may be. Your whole application/loan summary needs to be easy to read and understandable without you present to explain it. This is especially true for the financial projections; if a lender cannot follow your accounting logic to its profitable end, then they are unlikely to approve your loan.

If you have a hard money or private capital loan request or questions about our private capital loan programs, contact Montegra at 303-377-4181.