Asset Based Loans

When a company needs fast cash to complete a real estate transaction, it might not be able to work with a traditional lender. In these situations, it may be better to get a hard money loan, which leverages the value of the property itself as collateral. These loans are more flexible since lenders tend to be investors, not banks. Companies that may not qualify for other financing options can often get hard money funding instead.

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Working with a traditional bank or lender can be challenging for many companies for various reasons. Enterprises with a low credit score or short sales history might not qualify for different commercial loan options.

When trying to purchase equipment or real estate, these challenges can prevent a business from moving forward with a project. In these cases, the company can typically work with a hard money lender to get flexible options. Usually, these lenders are individual investors who don’t have to work under a bank’s restrictions to approve the loan.

Hard money investors don’t necessarily need to see excellent credit scores or repayment history. Instead, if the machinery or property value is high enough, it can be secured as collateral.

While this financing option works well for businesses that can’t get funded elsewhere, it does come with challenges. First, these loans are typically much shorter than traditional mortgages, with some terms lasting a year or less. Second, hard money lenders often charge higher interest rates, so the borrower has to pay more in the long run.