Private loans, often referred to as hard money loans or bridge loans, offer three significant advantages over conventional or bank-financing arrangements. Private lenders can fund quickly, within a flexible structure and without prepayment penalties that can unintentionally hinder the success of your business. Here are the top three advantages of hard money loans:
1. Rapid Funding of Loans
Trying to secure even the simplest of loans from a financial institution in the post-Enron, post-economic downturn world can be extremely difficult. Banks never-ending requests for forms, statements and other documents force businesses to wait. But we all know that opportunity waits for no one. Private lenders can move quickly since they base decisions largely on the liquidation value of the collateral provided. Faster decisions mean you start moving forward in your business rather than get caught in funding limbo.
2. Flexible Term Structure
Your business is constantly adapting to changing market circumstances. Traditional financial institutions aren’t as flexible and typically take a one-size-fits-all approach to all requests. Private lenders can structure repayment and collateral release terms in ways that are mutually beneficial to both borrower and lender. Greater flexibility often results in better outcomes.
3. No Prepayment Penalties
You know that even the best-laid plans can change, hopefully for the better. If business goes particularly well, the last thing you want is to be penalized for your success. Yet traditional financial institutions often charge hefty prepayment penalties if circumstances change and a loan is fully or partially repaid before the due date. Private lenders are fully invested in your success and typically structure loans without prepayment penalties or added fees. It’s one more way a private lender can contribute to your success.
Taken from actiumpartners.com