Utah Hard Money Loans

An Introduction To Alternative Funding

Hard money is a form of alternative lending that is often misunderstood. Rather than being a funding option of last resort, hard money offers a creative way to obtain funding quickly and without having to jump through the hoops normally associated with traditional bank funding.

If you are new to hard money lending, we want to introduce you to what we believe is one of the best funding options for business. On this page you will find valuable information designed to introduce you to the hard money concept. Actium Partners is based out of Salt Lake City, Utah, but this information will help you get a hard money loan in any state.

Or call us at 801-983-6701

Hard Money: What It Is

Hard money is funding that is secured by some sort of hard asset. More often than not, borrowers offer real estate as collateral. This is good for both them and us, inasmuch as property is one of the easiest assets to value.

As hard money is loaned against a tangible asset, lenders like Actium Partners do not have to put so much emphasis on things like cash flow, credit history, and income. Lenders are primarily concerned about the value of the asset and its sale potential in the event of default.

Documents Requirements for Closing

The vast majority of hard money loans are made for the purposes of acquiring property, rehabbing existing property, or facilitating business expansion. As such, document requirements are fairly uniform. Lenders normally require.

– A completed loan application
– Photographs of the asset property
– Purchase contract (for new acquisition)
– Estimated construction/repair costs
– Preliminary title report
– Proof of insurance.

This list constitutes a general guideline. Note that document requirements for closing can vary from one loan to the next, depending on the purpose for the loan and the amount requested.

Here’s what you don’t need for loans.

Loan-to-Value Ratios

Hard money lenders pay attention to loan-to-value (LTV) ratios just like traditional lenders. An LTV ratio represents an amount a lender is willing to lend as a percentage of the value of the property being acquired. Thus, a 50% LTV would make $100,000 available to purchase a property listed at $200,000.

Pitch a deal with an LTV that is too high and obtaining the loan will prove rather challenging. Borrowers need not worry as much about low LTVs, as the actual amount borrowed can be negotiated before the loan closes.

Presenting a Loan Request

One of the big differences between hard money lending and traditional bank lending is presentation. Hard money lenders are, by nature, more open to hearing a whole host of reasons detailing why they should lend. Thus, it behooves borrowers to put together the best presentation they can.

Where a bank will require a complicated presentation, a hard money lender is more interested in understanding the value of the real estate offered as collateral than all types of details and projections. This makes working with a hard money lender much easier than a traditional bank.

The Exit Strategy Explained

An exit strategy is simply a plan explaining how the borrower intends to repay a hard money loan. A solid exit strategy gives the lender confidence that the borrower knows what he/she is doing. However, some cases require multiple exit strategies that account for different scenarios. The stronger the exit strategy, the more confident the lender is.

In Summary

Hard money is money loaned by private lenders based on a hard asset offered as collateral. Though hard money lenders typically offer a faster and easier application process, borrowers do need to be prepared to present their proposals in a comprehensive and convincing way. The combination of a strong proposal and a valuable asset will likely seal the deal.

Ready to get started? Contact our Utah Hard Money Lending office here. Or call us at 801-983-6701.