Commercial buildings are excellent investments, and many people take advantage of this opportunity. But, unfortunately, substantial sums of money are required to close such deals. However, commercial loans have proven to be a savior for people in such times to finance their ventures.

If you’re unfamiliar with commercial loans, we’ve got you covered. This blog will answer all your questions about commercial loans and hard money lending.

What Does A Commercial Loan Require?

Most traditional lenders consider the three Cs: cash flow, character, and collateral before issuing a loan.

Borrowers can repay the loan if their cash flow is constant and predictable. So, if you’re looking for a business loan, pay attention to these three Cs.

Furthermore, lenders require collateral for reassurance and security. If the borrower defaults on the loan, the lender can recover their losses by using the collateral.

Will My Credit Score Affect The Loan Rates?

One of the most frequently asked questions about business loans is whether the borrower’s credit history would affect loan rates. Credit ratings and reports are significant for some commercial loan lenders when determining terms.

However, they won’t lead you to loan rejections. A lender might offer lower interest rates on loans if you have a strong credit score or might charge you a higher interest if it’s weak.

Lending risks can be higher if you have a poor credit history. As a result, several lenders have raised interest rates. So it’s all up to the lender.

What Can I Use As Collateral To Secure A Loan?

The majority of people choose real estate properties as collateral. Other types of collateral, such as inventories, assets, vehicles, machinery, and more, are also frequently accepted by lenders.

Firms may use future cash flow contracts as collateral if they can’t furnish tangible assets. You should contact your lender to explore the best course of action for meeting your needs while also meeting their standards.

Is It Possible To Secure A Loan After A Bank Rejection?

Due to weak credit scores or other factors, most traditional banks refuse applications. Private lenders may be able to assist you if banks are unwilling to lend to you.

When banks say no, private lenders like Commercial Private Equity say yes and grant loans despite denials.

We provide commercial loans and other specialized loans, such as bridge, construction, raw land, and workout loans, at affordable rates to make money lending easy for our clients.

We also offer a three-tiered lending program with varying loan requirements to make hard money loan acquisition a possibility for our customers.

Contact us today for more details.

Short-Term

Construction loans provide you with the financing you need to complete your project and then allow you to repay it.

It’s always important for you to first decide the purpose of obtaining capital. Once that’s decided, you can opt for a suitable loan.

Money is essential for every successful business. However, having so much capital on hand isn’t practically possible. As a result, firms resort to money lending.

Hard money lending has gained popularity among many Americans as they switch from the lengthy approvals and high standards of traditional financing solutions. However, when hard money lenders make their final decision, LTV is a critical factor to consider.

Hence, it’s crucial to know about LTV ratios to get your hard money loans approved. Let’s look at what an LTV ratio is and what it can accomplish for you in more detail.

Fundamentals of LTV Ratio

The loan-to-value ratio is critical in deciding the loan amount in most hard money loan applications. It’s a ratio that compares the amount of debt you owe to the value of your assets.

It’s one of the best ways for private money lenders to assess risk before giving a loan. LTV ratios of 50% to 80% are feasible and ideal for completing a loan contract. Any percentage larger than 80% is risky for the private lender, and anything less than 50% is impossible to achieve.

The Importance of LTV Ratios

Because it specifies the level of lending risk, the LTV ratio is one of the most significant determinants of the loan application outcome. Calculating the LTV ratio is part of any private money lender’s underwriting procedure.

Because hard money lenders don’t do credit checks or other comprehensive checks like banks, they rely on the LTV ratio to make decisions. The LTV ratio also helps private money lenders determine how much money they can collect if a borrower defaults on the loan.

How to Calculate the LTV Ratio 

Dividing the total amount borrowed by the total cost price and multiplying it by 100 will get you a loan-to-value ratio in percentage form.

LTV = (Loan Amount / Total Cost Price) × 100

Assume you’re purchasing a $400,000 home with a 20% down payment. This implies you’ll put down $80,000 and take out a $320,000 loan to cover the rest of the cost. This indicates that the LTV ratio is 80% ($320,000/$400,000 * 100 = 80%) and suggests that lending money in this situation is feasible for the lender.

Understanding the LTV ratio can help you get the best hard money loan deal possible. If you’re looking for a reliable private money lender to obtain hard money loans, stop by Commercial Private Equity today.

For over 75 years, we’ve been serving our clients and have developed a three-tiered financing strategy with varying loan-to-value ratios. We provide several specialized loans to our clients, including construction, bridge, commercial, raw land, and workout loans, to give flexibility in their loan transactions.

Contact us today to get started.

Over a million property owners in the United States face foreclosure every year. Rising inflation can cause financial hardship for businesses, so it’s no surprise that commercial bankruptcies soared by 26% during the pandemic.

However, you can secure your commercial property and repossess it if you deal with it the right way. This blog will guide you in dealing with the threat of foreclosure.

Know Your Rights

Knowing your corporate rights is the most crucial aspect of every commercial transaction. Business property owners are subject to various commercial lending laws.

Determine first whether your property is even eligible for foreclosure. Consult a reputable private money lender to learn more about your business loan privileges.

Attempt to Stop It

You can request special forbearance, a repayment plan, or a loan modification to avoid foreclosure with commercial hard money lenders. They can modify plans as much as possible to help you repay the amount.

The success of any of these unusual exceptions is contingent on your ability to persuade your lender. You should be able to show that you defaulted on the loan owing to a temporary problem and that you will soon be able to get back on your feet financially.

Consider Your Options

You can still dispute the foreclosure in court if you can’t halt it. You can also consider filing for bankruptcy, selling the business property in a pre-foreclosure sale, or filing a lawsuit to stop the foreclosure.

Exploring your choices with the support of a business hard money lender or lawyer can be more successful. Other less desirable options, such as a deed-in-lieu-of-foreclosure and a commercial short sale, are also worth considering.

Get Workout Loans from Commercial Private Equity

Workout Loans might help you restructure your debt payments. We recommend working with a seasoned private asset-based lender who can assess your financial condition and offer you a realistic workout loan alternative.

A workout loan at Commercial Private Equity will allow you to begin repaying your debt under new terms customized to your financial situation. For the past seventy-five years, we’ve been assisting businesses in financial distress. Clients can use our asset-based workout loans to modify their debt payments.

We offer a variety of hard money loans, including bridge, construction, commercial hard money, raw land, and workout loans. Our professional underwriting staff can pre-approve your loan in as little as 24 hours.

Contact us today to avoid foreclosure and better manage your finances.