Just How Quickly Can a Hard Money Loan Be Arranged?

Just How Quickly Can a Hard Money Loan Be Arranged

One of the main selling points of hard money loans is speed. Loans can be arranged much faster compared to bank loans. How fast? That depends on the circumstances. But here at Actium Partners, we have been known to get it done in 24 hours. That is not the norm, but it is still possible.

Approval and funding on a typical hard money loan can be completed in a couple of days. You are looking at weeks to months with a bank. The difference is in how we do things. Needless to say, our clients, particularly property investors, appreciate the fact that we can fund them so quickly.

In terms of establishing a funding schedule, three things come into play:

1. Client Documentation

Hard money lenders do not require a ton of documentation to approve a hard money loan, but we do need some documentation. So the first thing that affects timeliness is the arrival of that documentation. The faster a client submits it, the faster we can begin reviewing it.

The good news is that hard money lenders do not require things like tax records, P&L statements, etc. Our documentation needs are very limited. In many cases, clients already have their documents together when they first contact us. They send them right over and we get started soon thereafter.

It makes sense then that delayed documents slow the process. There isn’t much we can do about that.

2. Property Appraisal

Hard money lending is asset-based. What does that mean? It means that clients offer some sort of asset as backing for the loans they seek. In the vast majority of Actium Partners loans, the asset in question is the very piece of property being acquired. The asset affects the funding schedule in that we need to appraise it.

We had a client a few years ago facing an emergency on a Friday morning. He needed funding by Monday, or he would lose the deal. Fortunately, we were able to send a team member out to appraise the property that same day. We went ahead and began preparing the lending documents that afternoon. We transferred funding to the title company on Monday morning.

Again, this sort of thing is not necessarily the norm. Still, hard money lenders do their best to get appraisals done as quickly as possible.

3. Preparing Loan Documents

The final task in getting a hard money loan funded is preparing the actual loan documents. Document preparation doesn’t take long once started. So really, it is a matter of getting the task done as soon as it fits into the lender’s schedule. Clients do not typically have to wait too long. Once the appraisal is complete, document prep goes quickly.

Obviously, borrowers need to review and sign loan documents. This is a pretty straightforward task. However, funding can be delayed if a client seeks to have the documents reviewed by an attorney. There are those rare occasions when documents need to be modified in order to satisfy both parties.

Speed is often a defining factor when real estate investors and private equity lenders are trying to acquire new properties. Particularly in commercial real estate, where desirable properties face stiff competition, investors need a funding source they can count on to be fast and seamless. That source is hard money.

Hard money lenders can do what traditional lenders cannot. Perhaps that’s why so many property investors rely on us to finance their projects. We are able to approve and fund loans much more quickly than our traditional counterparts. When time is of the essence, hard money is generally the investor’s best bet.