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How Hard Money Loans Work

While most people know about traditional bank loans, such as mortgages, hard money loans are somewhat less familiar to the common investor. Traditionally, a hard money loan is used in commercial real estate or business acquisitions, however anyone may be eligible to apply for one. Before seeking a hard money loan, you will want to understand the nuances and risks associated with one. The following is some basic information you should know before applying for a hard money loan.

First of all, hard money loans are short term, which means they can be paid off in as little as thirty days with no pre-payment penalty. The simplest way to understand a hard money loan is to think of it as a cash advance for an investment opportunity. For example, if a property deal is being offered at a competitive rate but only if closed on within a month, then an investor will need access to funds immediately. A typical bank mortgage requires extensive underwriting, including appraisals and credit checks, which is a time consuming process. A hard money loan is based on the value of the collateral rather than the creditworthiness of the borrower; therefore, the loan can be issued without much delay. The tradeoff for timeliness, however, is high interest rates and fees. A wise investor should be able to pay off the loan quickly, knowing that the initial high interest rates will be made up in the investment return.

In order to protect the lender, a hard money loan often comes with a low loan-to-value (LTV) ratio. The LTV ratio is the amount of the loan divided by the total value of the asset. Thus, if a lender loans $900,000 toward a $1 million […]

By |February 1st, 2016|Blog|0 Comments

Your Guide To Working Capital Loans

Working capital loans allow you to tap into the capital of your business. This type of loan is much different than your typical business loan. You should be clear on how they work and the details of the loan before you consider getting one.

How They Work

A working capital loan allows you to borrow the money you have in your business that isn’t readily available. This is money tied up in your assets or money owed to you through unpaid invoices minus your liabilities. A loan allows you to use this money now when you really need it. The loan is short term, meaning you will pay it back rather quickly. Ideally, you will use the money to help get your business back on track, so paying it back shouldn’t be too difficult.

Important Points

A working capital loan allows you a lot of freedom that you don’t get with a traditional business loan. When you apply for the loan, you don’t have to declare the purpose for the loan. It is assumed you will put it back in your business. You can use the money in any way you want, but generally you should still have a purpose in mind.

You should know that as a short term loan, the interest is often higher and the payments are also larger. It is important that you plan for the payback of the loan. Also, being short term, this loan isn’t designed to be used for investing in your business or buying large assets. It generally is designed to be used to pay for daily operation expenses, such as paying employee wages or buying supplies. It can also be used for unexpected expenses, like repairing broken equipment.

You may […]

By |January 4th, 2016|Blog|0 Comments

How to Get CRE Financing

CRE Financing, or Commercial Real Estate Financing, are loans granted to prospective investors or owners who want to buy commercial property, such as office space or shopping malls. The loan amounts are larger than for private real estate loans and amortize over longer periods. Often, there is a large amount left at the end known as a “balloon” payment, and if it can’t be paid off, the owner usually refinances. It may be a challenge to get CRE financing if you are new to real estate investments or have a spotty credit history. However, even these are not insurmountable obstacles if you know how to proceed.

You should approach the bank with necessary documents showing your ability to pay off the loan and credit history. This includes tax returns and all income. It helps to approach a bank with whom you already have a positive relationship. If you have borrowed and paid back personal loans or mortgages with the bank, you may be a customer in good standing, and the specific bank may be more amenable to offering CRE Financing.

Make sure you have a plan for your property and can show the bank. A business plan detailing how the property will be used and how much rent you can expect to charge will give a clearer picture of the profitability of your project. Demonstrate why you feel there will be low vacancy rates and indicate that you will attract clients who are financially stable and can pay their rents. You may want to point to past successes in the same location. Also, show calculations of what you can expect to earn per month and per year.

If you have some spots on your personal credit history, […]

By |December 6th, 2015|Blog|0 Comments

Business Apps to Make You More Efficient

A recent increase in our dependency on smartphones has made them a lifeline to connectivity – even in the business world. As that becomes more and more the case, mobile applications have exploded into the marketplace. Some of these apps are great, some are good enough and others are a waste of time and money. There are a few factors to consider when contemplating a business app including cost, effectiveness at solving a business problem, ease of use and connection to outside resources. Here is a list of four great business apps that will make you more efficient, judged on those criteria.

 
Harvest

This application takes time keeping for projects and makes it simple, pretty and transparent. Every user can see who is working on which project, which is amazing for efficiency, while also saving all of this info so that timecards can be created with a snap of your fingers. It can also create invoices, accept payment and it connects with over 70 other business apps to keep ideas flowing. Harvest starts with a 30 day free trial and then charges monthly depending upon the size of your business.

TripIt

TripIt has two options, free and Pro. Both applications track every detail of your travel itinerary, but the Pro option takes all of the stress out of travel. It alerts you when the seat you want becomes available, when you’re eligible for a refund and when any changes happen with your flights. If you have a team who are traveling to different places you can also go for the TripIt for Teams option and allow everyone’s itineraries to be clearly displayed. Like many business apps, the monthly price varies depending upon the number of users, but […]

By |November 23rd, 2015|Blog|0 Comments

What Your Business Needs To Know About Bankruptcy

The very last thing you want to think about as a small business owner is the idea of insolvency. You didn’t start your business with the idea that you might have to fold. But sometimes bankruptcy might be just what you need to keep going, to start a new venture, or to protect the assets you still have. The three most common options for businesses are Chapter 7, Chapter 11, and Chapter 13.

One of the reasons for filing for bankruptcy is to stop collection proceedings and work out repayment arrangements, where possible. If you are a sole proprietor, you are not legally considered a separate entity from your business, and you will need to file as an individual. However, if you have set up a corporation or LLC, you will be able to file as a business and won’t be considered personally liable for any of the business debts.
Chapter 7
Filing for Chapter 7 is usually done by LLCs, corporations, and partnerships. In some cases, you may also file for Chapter 7 as a sole proprietor. In this type ofproceeding, a trustee is appointed to manage the sale of any remaining non-exempt assets to pay creditors. Not all of the property will be eligible for sale, for example, if it is under lien by other creditors.
Chapter 11
Chapter 11 bankruptcy proceedings can be complicated and are usually only entered into by larger companies who need to restructure but intend to stay in business. It can be very time-consuming, and even expensive. It’s also risky, as there are plenty of tax laws that need to be observed. There are some provisions for small businesses who wish to file Chapter 11, but it’s best to have a tax […]

By |October 26th, 2015|Blog|0 Comments