If you're a small business owner, you know that you don't always have access to high amounts of capital, like some of the larger organizations. However, this doesn't mean you don't need the money. Should you find yourself in need of short-term funding, don't just look to traditional lending institutions. There are a number of reasons a hard money loan can prove to be a better option.
Painless Early Payoff
Traditional leaders make more money when you pay your loan off as agreed. As odd as it might sound, they don't necessarily want you to pay off the loan early. When you do, they lose out on some of the interest they would have made from your loan, often causing them to charge you an early payoff fee.
It's like you're being penalized for trying to do the right thing. Hard money loans don't come with this type of hassle. Should your circumstances change for the better and the opportunity arises for you to pay off the loan early -there are no penalty fees.
Flexible Payment Structures
When obtaining a loan from a traditional financial institution, in many cases, the ball is entirely in the bank's court. It's almost as if they've taken the stance that if you want our money, you have to pay entirely by our rules. Given the unique needs of small business owners, this can be a challenge.
With a hard money loan, it's your show. While the lender will have some parameters in which the loan needs to be repaid, you have the ability to set a payment date, how the payments will be structured and a number of other factors that make the repayment process more convenient.
Compared to a traditional loan, you can expect cash in hand faster. Traditional loans have application processes that require a thorough investigation of your organization's financial history, profit and loss sheets, your business's credit score, references and a host of other factors. This all adds up to a slower approval process and slower funding.
Hard money lenders are exclusively interested in your ability to provide collateral equal to the loan amount. Once you've provided proof of this collateral, your loan is pretty much approved and the funding process begins. When in a tight financial situation, faster funding is helpful.
Make sure you are not overlooking a hard money loan in your business's time of financial need.