The process of getting a bank loan can be overwhelming. Hence, many people turn to private lenders. Because of the asset-based financing style, lenders are willing to lend for riskier projects, making future dealings possible for investors and business owners.
However, choosing a private lender can be a bit challenging. It isn’t as straightforward as contacting your local bank. Here are some things to consider while looking for a private lender:
Provides Flexible Terms
If a lender refuses to negotiate the terms of your hard money loan, you probably need to look for someone else.
Private money lenders are known for being flexible when it comes to collateral, repayment terms, and other elements. If it’s not flexible, it won’t be much different from a traditional bank loan.
Is Eager to Contact You
Private lenders should be much more attentive than banks to your questions and issues, and that they should be able to give you extensive responses to any problems you may have.
Because some lenders have expertise working with business clients, they can also be excellent counselors, so make sure you find a lender who understands the importance of effective communication.
Has a Good Track Record
It’s already a positive clue that a private lender has an excellent reputation if you’ve been referred to them by a mentor or a friend.
However, it’s never harmful to inquire about them to be sure the lender you’ve chosen is a suitable fit for you.
Offers Low-Interest Rates
You know that with the plethora of benefits private lenders offer, they also have slightly high-interest rates to compensate for the shorter loan durations.
However, they can still provide competitive interest rates, and it’s always a good idea to call multiple lenders to find the one with the best rates.
Requires Minimal Paperwork
If you’ve ever applied for a traditional loan, you might know how much paperwork is needed. Labyrinthine is probably the best word to describe the quantity of documentation you have to provide.
You have to submit stacks of documents, including your evidence of income, tax records, and other documents. It can take several weeks to gather the information that the lender requires.
Even if you think you’ve answered all of the questions, the lender is likely to ask for more information to back up the information you’ve previously provided. It might exhaust you and you might want to give up and walk away from the situation.
Therefore, look for a lender that requires minimal paperwork. In some asset-based lending, there is no paperwork needed at times.
If you’re looking for commercial hard money loans, look no further than Commercial Private Equity.
Contact us for more information.