As banks and institutional lenders continue to tighten their purse strings when it comes to funding commercial mortgages and regulations become more stringent, it becomes increasingly necessary for borrowers to think outside the bank to come up with creative funding alternatives. Here are five tips that can help borrowers get deals funded quickly with minimal red tape:

1. Define your goals. Whether it’s to get cash out of a property, extend the loan term, acquire a new property, or free up working capital for renovations, it is essential to pinpoint the objective of your loan request before you approach a private lender. If you have multiple goals for the transaction, then you should prioritize them.
2. Be realistic. Evaluate the goals and expectations that you’ve established for your project. If they are not attainable, then you should revise them. Expecting to get a super low interest rate if you have a low credit score or a high LTV (loan-to-value) rate is unrealistic and will make it difficult to get your project funded.
3. List your property’s positive attributes. Create a list of the assets that your property or project has so that you can highlight them to the private lender as value-added. Unlike bank lenders, private lenders will consider the post-renovation value of a property when underwriting a loan, so make sure to call attention to any current or future features of the property that increase its value or make it an interesting investment.
4. Acknowledge your property’s shortcomings. If there are any potential issues with the property it is equally important to be upfront and forthcoming about them to the private lender. The lender will learn about them while conducting due diligence and it will reflect poorly on your character as a borrower if it seems like you were trying to hide them.
5. Put the pieces together into one package. Combine all of the information from the previous steps and create a single package that you can present to and share with the private lender. Most private lenders will want to know the story behind your loan request, and your vision for your project, in addition to a simple presentation of the numbers and financial documents.

Hard money and private capital lenders enjoy working with borrowers to develop creative, out-of-the-box financing solutions for commercial loans that don’t fit into the tight confines of bank financing. For more information about Montegra’s commercial hard money loan programs, contact us at 303-377-4181.