Trying to get financing through a commercial hard money lender is not the same as from your traditional hard money lender. Many traditional brokers do not realize this and end up making some common mistakes.
In a perfect world, we would all have good credit and would have no problem getting approved for a commercial loan of any kind—but our world is far from perfect, much like our credit ratings. But to get approved for a traditional commercial loan you typically need to have a pretty good credit rating.
The importance of goo credit in getting a loan approved does not mean every business person out there has great credit. Chances are many of them do not. So how did they get a loan approved? They—or their broker–worked with commercial hard money lenders.
These types of lenders understand that they are taking on clients that are at a higher risk of defaulting. So they have the terms of the loan reflect the risk they are taking. While they may not be fond of them, if a borrower had a better option they would take it.
However, the process of getting approved for one is a little different than a traditional loan. If you are not careful, you may find your commercial hard money lender rejecting your application.
Things To Consider When Applying For A Loan From A Commercial Hard Money Lender
Filling out a loan application can be a confusing and difficult task no matter what it is for, but when you apply for one from a commercial hard money lender there are certain things you need to do that you probably did not in your application to the bank and credit union:
Tell your loan’s story. Don’t just tell your lender that you need the money. Since the risk is higher for them, they often want to know more. Tell them why you want the money, what you are going to use it for, and what you are hoping to accomplish with it. Give the lender the story behind the deal.
Don’t just submit a ton of information and data. Submit the right data. It is not uncommon for a broker to turn in an application that has way too much information and data in it, but not have the right stuff. For example, an application includes the borrower’s tax returns but fails to include the exact amount being requested.
Loan packages can be pretty big making it easy for something important to get overlooked. Including a summary of the major points and data with your application along with an executive summary can take care of this issue. This can also be a great way to get on your loan processor’s good side.
Everyone appreciates it when they don’t have to work as hard to get their task accomplished. Organizing your application can be a great way to earn brownie points with the loan processor.
Who doesn’t like brownie points?
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com 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.