4 Bank Issues That Don’t Scare Hard Money Lenders

4 Bank Issues That Don't Scare Hard Money Lenders

We put a lot of effort into differentiating ourselves from banks and credit unions. As private lenders, those of us in the hard money industry are able to lend on projects that just aren’t suitable for traditional lending. We can do things banks cannot because our business model is different.

Our ability to provide alternative funding for a variety of needs often leads people to think that hard money is funding of a last resort. Nothing could be further from the truth. Some of our clients do come to us because banks cannot help. Others come to us straight away. They never even think about bank financing.

Just to give you an example of what we can do, here are four bank issues that do not scare hard money lenders:

1. Lack of Income Verification

Banks almost always get nervous when potential borrowers cannot verify their income. Where there are no W-2 forms, no income and loss statements, and not enough information on federal tax returns to satisfy them, banks only see risk. We recognize risk ourselves, but we also see opportunity.

Lack of income verification doesn’t scare us away because our focus is on collateral. We do care whether our clients have the financial means to repay their loans. But we only make loans when a client’s collateral will support the amount borrowed.

2. Less Than Stellar Credit

Because we base approval decisions primarily on collateral strength, we are also not scared away by less than stellar credit. The same is not true with your typical bank. A bank underwriter will leave no stone unturned in the search for every detail regarding a client’s credit rating and history. We typically don’t look into such detail. If and when we do look at credit rating, it’s for the purposes of determining interest rates and terms.

3. Tight Funding Deadlines

The chances of going into a bank and getting a commercial loan in under a week are slim to none. Even 30 to 60 days is unusual. Banks generally need up to 90 days to do what they do, which is why they are reticent to lend to a client looking to fund a project in under a week. They just cannot make it happen.

Tight funding deadlines do not scare away hard money lenders. They certainly don’t scare away Actium Partners. We have had instances where clients were looking to fund their projects in 24 hours. While we cannot guarantee every loan will be funded that quickly, we can guarantee that our time frame is significantly less compared to a bank or credit union.

4. Previous Bank Denial

Banks are generally scared away when they are the second or third institution on the list. In other words, a decline from one bank could mean that other banks will follow suit. They just don’t want to take the risk on a client who has already been declined once or twice.

Previous bank declines don’t scare us away, either. We understand that banks have lots of reasons to turn away clients, reasons that do not matter to the hard money industry. We fund all sorts of projects that banks would never look at. It is what we do.

Banks and credit unions provide a valuable service. There is no arguing that. But many of the things that make them fearful about funding loan requests don’t bother us. We are more open to individual circumstances because we loan based primarily on collateral. If you would like to know more about our loan programs, get in touch with us at your earliest convenience.