One of the advantages of hard money loans is that the private money lenders who underwrite them are not bound by the same rigid federal restrictions that govern banks and other institutional lenders. This series of blogs will explore the types of out-of-the-box loans in which private money lenders specialize and highlight how hard money loans can be a crucial tool for the savvy commercial real estate investor. There are eight common types of loans that private money lenders will consider when which banks normally will not. These types of loans will be explored in detail over eight blogs: Cash-Out Bridge Loans, Loans to Foreign Nationals, Marijuana-Tenanted Properties, Note-Purchase Loans, Non-Recourse Loans, Vacant Land Loans, Tight Timeframe Lending, and Beyond the Typical Requirements.

Why Use Hard Money to Fund Tight Timeframe Deals?

When you apply for a hard money loan, you typically deal directly with the lender who will make the decision about whether to finance your loan request rather than with a middle-man who has to report to a loan committee as often happens at banks and other institutional lenders. Dealing directly with the decision-maker is one reason that hard money loans can be approved quickly. Hard money loans can usually not only be approved but also closed and funded in two to three weeks. In some situations, it can even be possible to receive funds in a few days, especially if the borrower already has a relationship with the lender. Either way, these loans can close in a fraction of the time that a conventional mortgage takes, allowing borrowers to take advantage of time-sensitive deals they might otherwise miss out on.

How Can You Speed Up the Hard Money Approval Process?

The best way to assure that your hard money loan application will be processed in a speedy and efficient manner is to prepare a complete application package that has all of the information that the private money lender will need to assess the loan request, the project’s feasibility, and the property’s value. This information includes a description of the collateral (value, zoning, location, etc.), an explanation of how the funds will be spent (if some of the funds will be spent on renovations, then cost estimates should be obtained), a basic loan application identifying who wants to borrow the money (e.g., an individual or a business entity), a business plan, and an executive summary that presents the information in an easily digestible format. The more information a borrower provides to their lender upfront, the faster the approval and underwriting process can proceed.

Quick turnaround times are just one example of the flexibility and willingness of private money  lenders (frequently called hard money lenders) to work with their borrowers to find creative, speedy lending solutions to time-sensitive financing problems when conventional lenders often just say no. Check out the next blog in this series, Beyond the Typical Requirements, for another example of how hard money loans can work for you.

For more information about Montegra’s private capital loan programs, contact us at 303-377-4181 or loans@montegra.com.