Rotten Credit Keeping You From Getting A Loan? Try Applying
With Commercial Hard Money Lenders!
Poor credit can prevent many from even applying for a
commercial loan, but it doesn’t need to. There is an option that is still
available through commercial hard moneylenders.
People make mistakes with money. It happens. You don’t mean
to (or maybe you did). Sometimes life just throws too many problems at you, and
you couldn’t see another way out—or maybe you and your credit card were the
life of the party in college.
So you developed bad credit while you were in college or
your younger years. Now you are a responsible, hard-working adult that just
wants to open your own business and be your own boss. It’s the American dream.
Too bad your rotten credit rating is keeping you from getting approved for a
traditional commercial loan.
Don’t worry–you are not dealing with your local loan shark.
So you don’t have to worry about someone trying to take out your kneecaps if
you miss a couple of payments. No, commercial hard money lenders
are legitimate, private individuals or companies that
loan money to people and businesses with rotten credit who can’t get approved
for a traditional loan.
Loans are secured by commercial property and will have
higher interest rates than conventional loans. Since there is more risk involved
for lenders, they can charge higher interest rates. It is not unusual to see a
lender charge 11-13 percent and three points.
If you want to go into business for yourself, it is a cost
you have no choice but to accept. You may hesitate because you don’t want to
risk having your business foreclosed on, but lenders don’t want to foreclose on
your property if they can at all avoid it. When they do, it is not unusual for
them to lose money—and no one wants to lose money.
Beware The Fees And the Dreaded Balloon Payment!
Commercial hard money lenders
are not going to be willing to wait 10-30 years to get their money
back. They give short term loans; typically for a year, but maybe as long as
three years. With the interest rates being as high as they are, if you can, it
is not a bad idea to try and pay the loan off early—that is, unless there is an
exit fee or prepayment penalty.
While it may sound strange to be penalized for paying a loan
off early, lenders make money when you pay interest. If you pay the loan off
early, you don’t pay as much interest. So to recoup this loss, some will charge
a prepayment or early payment penalty.
Some will even charge exit fees whether you are paying the
loan off early, late, or on time. This way lenders make a little more money off
You will want to know if your loan has a balloon payment at
the end. Where these can sting is if you are paying your loan off late, like
many hard money loans often are. So along with the balloon payment you get
stuck with a hefty late fee making it even more difficult to get the loan paid
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.