So hard money loans are often hyped as the loans for those with bad credit scores or blemishes (e.g., short sales, foreclosures, bankruptcy) on their credit histories. However, there are many other reasons to use hard money or private capital loans to fund your commercial real estate projects. Here are eight reasons that savvy investors will opt for these loans over conventional mortgages from traditional lenders:

• You can get your loans approved quickly and efficiently. Many private lenders will provide a conditional approval to your loan request within 24 hours, and the underwriting process is typically completed in two weeks or less if the borrower provides all the necessary information in a timely manner.

• A hard money offer is viewed as stronger and more reliable. Banks have been known to pull financing during escrow, so if you’re going up against multiple offers, having a privately funded offer from a local, reputable hard money lender that is unlikely to be pulled for arbitrary reasons can help you stand out from the crowd.

• You have a shorter escrow period. Most hard money loans can close within weeks rather than the months needed for bank lenders. This can sometimes help you negotiate a lower purchase price if the seller wants to close quickly.

• You have more leverage. Many investors prefer to purchase real estate with cash only, but this can limit the number of deals that they can make at one time. Private capital loans give you the benefits of paying cash (getting offers accepted at better prices and buying properties from all-cash auctions) while allowing investors to purchase and complete more projects than they would otherwise be able to.

• You can reinvest equity from old projects into new ones. Private lenders are much more likely to approve a cash-out loan request in a timely manner than a bank lender. And then you can use these funds to buy a new property or complete a rehabilitation project.

• You can take out more loans concurrently. While most bank lenders have a cap on the number of loans they will provide to a single borrower, private lenders often view providing additional loans to the same borrower as a positive rather than a negative because they base each loan on the value of the secured asset itself rather than the borrower’s finances.

• The lenders are more flexible. Private lenders don’t have the same Federally enforced guidelines to follow for their loan applications, so they are more able and more willing to design creatively structured loans that work for the project instead of trying to make the project work within a rigid loan structure.

• You can get expert real estate advice. A private lender is also a partner. If they invest in your project, they want to see it succeed. And they will give you their honest opinion when they analyze your loan request and point out any potential issues that catch their eye that could hurt the project later on.

At Montegra, we have more than 47 years of experience in the Colorado commercial real estate market. So if you have a project that could benefit from private capital financing, contact us at 303-377-4181.