The project came to a screeching halt just two months short of completion. The home in Virginia was bought with the plan to completely renovate and sell for $1 million. Unfortunately, just two months away from being completed the builder ran out of money.
He was a solid professional with a strong eye for value. He had no other resources to tap and no bank would help him...so what could help him? A hard money loan.
What is hard money lending?
At its simplest, hard money loans are another way to borrow using a private lender instead of a bank. The property serves as the “hard” asset to back the loan.
Many entrepreneurs who need to borrow money for their business projects and are unable to get funded fully or quickly from their bank turn to hard money to get their projects done. It’s a common option and for good reason. More and more, builders are turning to hard money for the differences—and the advantages—it brings. Here are some advantages of hard money loans:
- No red tape. A bank or traditional lender takes weeks or months to process your request and get you the funding you need—if they approve it. Even waiting to find out if you have been approved can use up precious time and cause you to miss your opportunity.
- Speed. Because of the shorter and simpler process, a hard money lender like Walnut Street Finance can get you a fast approval; often in less than 48 hours—even over weekends.
- Short Term. It is not a long term loan. Think of it as a bridge loan—it gets you from the place you are now to a point where you can complete the project, so you can move on to the next one.
- Availablity. This is perhaps the most important thing to know when you are researching ‘what is hard money lending?’ Private lenders are always available to fund smart, well-thought out and professionally prepared projects. When banks aren’t lending, we are.
So what is hard money lending for? It’s for any builder looking for cash to close or complete a deal fast. Nobody wants to lose out on a deal simply because of a lack of funds.
What happened to the builder in the story? He called us and we reviewed the project. His plan was strong so we loaned him what he needed to complete the project. He had the funds and got his project up and running again—all in just one week.