A hard money loan is secured on substantial assets. They’re not a new notion; most historians believe the first evidence of loans backed by real estate dates back to Babylon in the 18th century BCE. Babylon’s infamous tyrant, Hammurabi, founded the world’s first national private lending system.

Other ancient civilizations, such as the Tang Dynasty, the Roman Empire, and the Spanish Empire, established various money lending systems after Hammurabi.

The Great Depression

Hard money loans first surfaced in the real estate market during the Great Depression in the United States. As they watched the banking industry crumble, people began withdrawing money from their banks and holding it in their homes, further hurting the financial system and creating a vicious cycle.

This brought about the trend of borrowing money from private entities. At the time, hard money loans had much higher interest rates than bank loans. This was because the economy was in flux, and no accurate expectations of improvement were available.

Interest rates continued to rise because of the high-risk character of these loans. However, without a steady source of income, most people would be turned down by banks. They were desperate enough to pay a higher interest rate for the loan asked by private lenders.

The 1950s Revolutionary Changes

Hard money loans resurfaced in popularity in the United States and Canada in the late 1950s. Banks didn’t rely on people’s incomes due to the instability of revenue sources, making it difficult for most people to acquire a bank loan. Hard money loans were still a high-risk, high-interest option, but they were the only way to borrow money.

The Real Estate Crash of The 1980s

The hard money lending industry suffered during the real estate slump of the 1980s and early 1990s. Lenders overestimated the future value of private properties, granting loans well above the property’s actual value. Lenders began to use loan-to-value ratios to assess the borrower’s need and ability to pay following this.

The Financial Crisis Of 2009

Until the mortgage crisis of 2009, there were no restrictions on hard money lending. Due to a lack of regulation, the real estate bubble burst, bringing about a global financial catastrophe.

This led to the introduction of regulatory laws to the money lending business. From 2006 to 2008, foreclosures increased by 225 percent, with 3.1 million foreclosures recorded in 2008.

Hard money is often frowned upon and accused of being exploitative when banks refuse to approve loan applications. Since the financial crisis of 2009, many rules have been put on hard money lenders to avert problems.

2010 And After

Since the financial crisis of 2009, the hard money market has grown dramatically, and obtaining a hard money loan is now easier and safer than ever. Since 2010, the private loan industry has more than doubled.

By processing and accepting loan requests in less than a week, the private lending industry has helped real estate investors. Because of technical improvements and the government’s legitimization of commercial lending firms, borrowers’ interest rates on private loans are lower than they’ve ever been.

Hard money lending is the way of the future. Are you looking for a trustworthy hard money lender? Commercial Private Equity will assist you.

We offer a variety of hard money loans, including bridge, construction, commercial hard money, raw land, and workout loans

In addition to the loans, we also provide commercial hard money loan counseling to help you ensure the best practices for borrowing and repaying loans.

Contact us today for more details.

No matter what you’re up to in the market – whether you’re selling necessities, luxury items, or some esteemed service, you can’t start operating a business without loans and money. Ever since the beginning of time, people have required resources to make things happen; in the case where people themselves did not possess those resources, they asked for those from the people around them.

Similarly, the modern-day banking and finance structure offers the luxury of lending money and loans to facilitate business ideas, commercial needs, and much more. Anyone who has taken up any kind of loan knows that this doesn’t come so easily – there are several requirements you have to fulfill before any commercial lending services will trust you with their money.

Before we dive into the specifications of the requirements, the advantages, and other forms of the lending process, let’s take a look at some of the most common types of lending services that you can avail yourself.

• You can opt for a commercial real estate loan
• You can opt for hard money raw land loans.
• You can avail an asset-based loan for your commercial needs.

One of the most talked-about and opted-for loans remains the asset-based loan most commercial entities choose. You’ve come to the right place if you want to learn more about asset-based loans and why they’re so popular. Let’s dive into the specifics of asset-based loans.

Let’s begin!

What Is Asset-Based Lending?

While most commercial lending companies issue loans in the most traditional forms, including assessing a company on their stability and ability to return the loans. Some companies can be eligible for other types of loans, such as asset-based lending. These companies have enough assets that they can bear to take loans, to help develop their companies.

If a business has substantial assets, an asset-based lending program might be the best fit. In this financing type, you can offer your company’s assets as collateral, including accounts receivables, brand names, and even intellectual property.

Not only do lending firms allow asset-based loans to companies that may not have significant growth at the moment, but it also gives them the liberty to make future investment and repayment decisions based on their performance. This is a luxury other types of loans might not be able to offer.

Understanding the Workings of Asset Based Lending

While calculations for a cash flow commercial loan are fairly easy to understand, most companies would involve your funded debt and divide it by the earnings before interest, taxes, depreciation, and more.

However, the case with asset-based lending is majorly different from the traditional form of lending money from a lending service. In asset-based lending (ABL), a lender is supposed to help a firm assess its assets and their value and then offer these as collateral to secure a sizeable amount for its commercial operations.

Advantages of Asset Based Lending

There are several advantages to the asset-based loan types for both lenders and borrowers. Let’s take a look at both sides of the advantages to see why asset-based lending is considered a big deal.

Benefits for the Borrower

Easier & Convenient

When you reach out to commercial lending services for an asset-based loan, you are preparing yourself for the advantage that your loan may be processed quicker than other forms of commercial hard money loans. Private money lenders are quick to pay off money to borrowers that are offering valued equipment or other assets as collateral. For a great commercial lending experience, it’s always better to opt for asset-based lending.

Lesser Covenants

Lending companies often expect borrowers to sign off on covenants. These undertakings are equally stressful for lenders and borrowers. With asset-based lending procedures, the collateral assets are covenant enough for lenders; they don’t have to worry too much about companies defaulting on loans.

Lower Interest Rates

Lending money isn’t always about taking the money for a cause; it’s also about returning the said money. To make the repayments easier, a lower interest rate is what all investors are looking for. Commercial lending processes offer low interest rates to borrowers, making it extremely easy for them to pay off loans in due time.

Benefits for the Lender

Less Risky

What do you think is a private lender’s biggest worry? They are afraid that the borrower will default, run away, and their money will go to waste. With asset-based lending, the lenders are more relaxed as they are getting the security of the borrower’s assets as collateral against the loan they are issuing.

Liquidation is Easy

As opposed to other forms of traditional lending services, it’s easier to liquidate the borrower’s assets in situations where they cannot pay off the loan. Since the loan is against the asset valuation, there is hardly any loss for the lender, and they get to recover most of their money through the liquidation of the asset in collateral.

ABL for Multiple Capital Purposes

Asset-based lending isn’t just about running a business or buying a commercial property; sometimes, it’s more than all of this. Some of the purposes that ABL finances are as follows:

• Acquisition of a new company
• Monetary help for walking into a joint venture.
• Helps small-scale companies pay off their dividends.

Asset-based lending is what every company should be opting for, and who can do it better than us? That’s right; Commercial Private Equity will undoubtedly assist you. Our services include offering a variety of hard money loans, including asset-based lending, bridge, construction, commercial hard money, raw land, and workout loans.

In addition to the loans, we also provide commercial hard money loan counseling to help you grasp the best practices for borrowing and repaying loans. Contact us today for more details.

In the United States, the startup culture is exploding at an unprecedented rate. During the epidemic, many people decided to create their enterprises. Ambitious entrepreneurs trying to get their feet wet in the startup sector were looking for ideas to set up their businesses.

Here are a few investment ideas for entrepreneurs to step in, giving you high returns.

Open a Restaurant

Do you have a passion for cooking? Why not make a fortune by turning it into a business? Consider opening a restaurant this year and wow the world with your culinary prowess.

However, opening a restaurant is not as simple as it appears. To begin, you must fund the acquisition of your space. If you don’t want to go through the lengthy process of applying for bank loans, hard money loans from private lenders is a good option.

Start a Pet-Related Business

The pet market offers numerous opportunities for new and small business owners. It’s a huge market worth $100 billion, making it an attractive business with a lot of demand. You may run a service or product-based pet business, providing training, walking, grooming services, or selling toys, food, or accessories.

To begin, you must raise money to purchase your pet shop. Hard money loans from private lenders are an excellent choice if you don’t want to go through the lengthy procedure of applying for bank loans.

Invest in a Daycare

Why not lend a helping hand to struggling parents if you’re good with kids? Daycare is a low-cost, high-profit business that can help you earn a lot of money. This should be your business if you enjoy working with children and are good at it.

If you want to start a daycare, find a property and finance it with hard money loans. Decorate your daycare to attract parents and kids. Children should enjoy their stay at your place while their parents can work peacefully without worrying about their toddlers.

Start a Laundry Service

Because the need for laundry services has surged during the pandemic, the financial benefits of opening a laundry shop might be enormous.

Consider opening a laundry shop near an area where everyone in the community may use it. However, with the skyrocketing real estate costs, purchasing a commercial property in the United States can be difficult.

Consider taking out a loan if you can’t afford to buy your home outright. Contact private money lenders who can help you finance your property quickly with bridge loans.

Financing a new firm can be tough. Commercial Private Equity recognizes the financial challenges that an aspiring entrepreneur may encounter and strives to assist you by offering asset-based credit options.

For entrepreneurs, we offer a variety of commercial hard money loans, including raw land, construction, bridge, commercial, and workout loans. We’ve also created a three-tiered loan structure to aid clients in obtaining loans.

Contact our representative today and get started on your dream venture.