If you aren’t familiar with them, you may need to be. They are hard money lenders. Atlanta is just one area in which hard money lenders operate, but it is a major one. In a challenging and often turbulent economic market, you still need financing to achieve a number of different large purchases. Whether you are considering a capital investment or you are acquiring a piece of property, it’s often difficult to do almost anything unless you have the credit necessary to get the funds you need when you need them. Even if your business or personal financial situation is quite good, you may have most of your assets tied up in non-liquid form, such as stocks or property. This means you won’t have the cash you require on hand for whatever project you are contemplating. At the very least, you might need to wait to convert some assets into cash, which could see a valuable or simply desirable opportunity slip through your fingers. Despite recent improvements in the economy, the credit market shows no signs of improving. This means you may have to consider alternative means of finance, including hard money lenders. Atlanta has several and there are good reasons to avail yourself of their services.
Prashant Gopal, writing for Bloomberg, explains that this is the tightest credit market in several years, despite a period of nominal economic expansion (sometimes referred to as a “jobless recovery.” He writes that lenders “are continuing to tighten the credit vise on homebuyers after five straight years of economic expansion, imposing the toughest standards since at least 1998, according to a new index by CoreLogic Inc. In May, credit availability for all home loans was half of what it was in the late 1990s, when the housing market was making steady gains much like today, according to the Housing Credit Index. Banks are less likely to overlook periodic shifts in income or brief credit lapses in adopting rigid rules to avoid losses after the housing crash, leaving creditworthy Americans without financing. …While federal programs for struggling homeowners have helped to boost refinancing, credit availability for home purchases in May was about a third of what it was in 1998, according to the index. …Professionals with established careers whose earnings fluctuate may no longer be considered good credit risks and are having trouble getting conventional financing. This includes self-employed professionals, doctors with their own practices and nurses who cannot show two years with an employer because they’ve shifted jobs multiple times… Lenders raised standards after the 2008 housing collapse compelled the government to rescue Fannie Mae and Freddie Mac and the companies forced banks to buy back bad loans from them with underwriting errors… [The] main issue in the housing market is the income of borrowers, not the standards of lenders.”
In other words, the best options may be your local hard money lenders. Atlanta offers multiple such lenders, and the proceeds from a hard money loan could be used for a number of different things. If the loan is for a specific project, such as construction, that project’s duration is probably anywhere from a few months to a few years. A hard money loan might be an asset-secured loan (and it may have a relatively high interest rate based on risk), which is one of the reasons hard money loans offer value to customers who cannot secure more traditional means of financing for a project or purchase. A hard money loan could also be one that involves a foreclosure, or a situation in which a mortgage is in arrears.
Unlike more traditional means of funding, while hard money lenders may look at the credit score of the loan applicant, the primary reason hard money loans are approved has to do with the value of the asset that is put up as collateral to secure the loan. That is why this type of loan is referred to as an asset-backed loan, because the asset is offered up as collateral and can be forfeit if the borrower ends up in default. The collateral therefore reduces risk for the lender and, the greater the collateral, the more likely the lender is to be able to approve the loan. (If the borrower defaults, the lender is typically the first creditor to receive remuneration.
When you choose to seek out hard money lenders (Atlanta being only one such area where you might do this), what you’re really doing is looking for private lenders. This may seem like a subtle distinction, but a private lender is NOT a bank. As Lisa Magloff of Demand Media explains, “It is called hard money because it is usually secured by a real asset, such as property. Hard money loans are often easier to get than bank loans, but they come at a big cost, and a big risk, to the borrower. Many startup businesses turn to hard money loans when they cannot get a bank loan, but these loans can be very difficult to repay. …A hard money lender is essentially a person or company that has money to lend. Some hard money lenders are individuals with a large amount of cash on hand, who lend money to a small number of people as a business. Other hard money lenders are large companies that lend money to hundreds or thousands of individuals and small businesses. Many hard money lenders are actually merchant cash advance providers, which offer cash to businesses in exchange for a share of future earnings. Some hard money lenders loan money to startup businesses and secure the loan with the business-owners’ property. This type of hard money lender will not loan money unless the borrower has an asset, such as a home, that can be repossessed in the event of nonpayment. However, most hard money lenders are merchant cash advance lenders, who will lend startup, or existing, businesses a lump sum in exchange for a share of future earnings. These lenders usually automatically deduct a percentage of the business’ credit card transactions.”
Magloff explains that the benefits of hard money loans is that hard money lenders (Atlanta’s or any other city’s) will work with businesses that may not have much in the way of income or other collateral. Hard money loans are quick and easy to apply for, and if the loan is approved, the money will come very quickly, so that the business has access to the funds it needs when it needs them. Some hard money loans are provided by merchant cash advance businesses, and these businesses typically don’t ask borrowers to provide a sales history before they make a loan to a business (which is especially helpful when you’re trying to get a new business off the ground and you don’t have the liquid capital you need to do so). It is, however, extremely important that you select a reputable hard money lender with which to do business. Infiniti Funding is one of the hard money lenders Atlanta has to offer, and we believe we do a very good job (and we treat you, our customers, very well in the process).
Ankit Duggal, writing for Bigger Pockets (an online real estate magazine) explains that looking for private lenders, while it can be challenging, is necessary because without money, it is impossible to invest in real estate (among other investments). He explains that investors “need to actively work on bringing in private money lenders to both tie up their deal and fund their real estate investment opportunities. A private money lender,” he explains, “ is a non-institutional (non-bank) individual or company that loans money, generally secured by a note and deed of trust, for the purpose of funding a real estate transaction. Private money lenders are generally considered more relationship-based than hard money lenders. …One of the biggest mistakes that new real estate investors make is that they spend an inordinate amount of time learning about finding and typing up deals but a small amount of time on how to raise equity capital from private money lenders. It’s just as important, if not more important, for real estate investors to understand the ins and outs of raising money as finding the deal. Finding a deal is great but if you do not have earnest money to tie up a deal or funds to purchase it, then all that time and effort is for nothing. …When you make an offer on a piece of property, it is expected, and usually required, that you place a earnest money deposit down with your offer. If you are currently living paycheck-to-paycheck, coming up with even a few hundred dollars can be a big hurdle in launching your real estate investment business, let alone thousands needed for a purchase. Hence if you work on raising capital from private money lenders while locking up deals then you will have a greater chance for investment success.”
But Duggal is making an unnecessary distinction here. Hard money lenders (Atlanta area lenders or those in other cities) are also private money lenders. In other words, not all private money lenders are hard money lenders, but the typical hard money lenders are private money lenders. And it would be unfair to say that these lenders are NOT relationship based because the principles of good business remain the same no matter who is doing business.
Dorie Clark, in Forbes, explains that one of the ways to build lasting business relationships is to keep people “in your orbit.” He writes, “How do you ensure you’re building deep, trusting relationships? A major part of it is staying in touch over time. …Relationships determine the job offers you’ll get, the consulting contracts you’ll win, and the business opportunities you’ll be presented with. Yet too many of us don’t think strategically about how to cultivate meaningful connections.” Karina Butera writes something similar: “To make a profit, there must be sales of a product or service. To create the product or develop a service, relationships are required with suppliers and stakeholders. To sell the product, there needs to first be a relationship of trust built with the customer. To manage the business, company leaders and managers must build a relationship with their people based on trust, respect and understanding. Our customers, our employees, our stakeholders, our managers and leaders are all human. Humans are complex emotional beings. No two individuals are identical (even identical twins!). Everyone has different needs, desires, aspirations, values and expectations. Those who are able to discover and leverage these unique variables in individuals build exceptional teams and successful companies. It takes building and managing ongoing relationships to unearth, develop and maximize the talents of your staff, the desires of your customers and the expectations of your stakeholders. When you’re focus is on managing relationships, you are in an incredibly powerful position to get the best out of your staff, get ahead of your competition in serving the needs of your customer and gain the cooperation you need from all stakeholders to achieve your business goals. Underestimating the importance of business relationships equates to underestimating the importance of solid foundations in a building, and will set your business up to stagnate and eventually crumple.” The same facts apply no matter what type of business you are attempting to run or to engage. If you are looking for hard money lenders (Atlanta’s or any other city’s), then you’ve got to find one with whom you can build a meaningful business relationship. That is our goal here at Infiniti Funding, and the reason we believe we would be a good fit for your financial needs.
We will listen to your specific parameters, reassure you, consider your business scenario, and find you the financial solution that best meets your needs. In a turbulent economic climate, with credit tight and options sometimes scarce, we are well positioned to deliver to you the solution you require. Let us answer your needs; let us end your search for hard money lenders.