Hard money in the financial sector is money owned directly by the individual or fund making the loans. Actium Partners is a hard money lender. Unlike a bank, we do not have a complicated management structure with loan approval requiring weeks if not months by the time various committees and individuals review it.
Why should you care? Because we have hard money to loan when banks will not help. Greater availability is one of the hallmarks of hard money lending and bridge loans. Private lenders like Actium can find ways to make hard money loans available in spite of banks not being interested in helping out.
Financing Small Business Needs
Imagine a Salt Lake City small business with a financing package from a commercial bank. If that business fell on difficult times due to circumstances beyond anyone’s control. Suddenly the bank decides it can no longer continue to extend the company’s financing package. What is the business owner to do?
Applying for a small business loan is probably out of the question. Why? Because the new bank is going to look at everything from the company’s past performance to its current assets. Bank underwriters will automatically be suspect of the company’s ability to repay based on its current financial circumstances.
Ownership is confident that the company’s current financial challenges are only temporary. But unless they can convince bank underwriters of that, there will be no money forthcoming. Then what? Hopefully the company contacts Actium for help.
It’s All About Collateral
Hard money loans are generally approved based on collateral. To put things as simply as possible, lenders like Actium ask applicants to put up collateral as security for a hard money bridge loan. We take a close look at that collateral to see if its value is enough to back up the amount being requested.
The fictional small business we have been talking about might own its building and land free and clear. If so, they could offer both as collateral. We would examine the value of the total property as compared to the amount the business wants to borrow. If we are satisfied with the loan-to-value ratio, we would consider making the loan straight up. If not, we might request an additional piece of property be offered. Alternatively, if there is already a mortgage on the property there could be enough equity where Actium could lend enough to pay off the existing lien and provide the borrower with additional cash.
From our perspective, loaning to the small business is not really about whether or not their current financial challenges are temporary. We certainly hope they are. We hope that a hard money loan will provide enough financing to help the business get things back on track. But if not, our interests are protected by the value of the collateral being offered.
A History of Helping Businesses
Actium Partners has a history of helping small businesses when banks refuse to get involved. We do what we do because we know that small businesses rely on a variety of creative financing tools to facilitate everything from day-to-day operations to future growth.
The reality is that commercial banks just are not flexible enough to handle any situation a small business customer runs into. Do not misunderstand, commercial banks do offer a vital function within the general business environment. But they are limited in terms of what they can do.
Private lenders are a lot more flexible. One of the key benefits of being a private lender is having more control over our lending decisions. Therein lies the advantage of hard money loans. Lenders and borrowers can work together to create customized financing solutions that make everyone happy.
We have hard money available if your bank will not help out. Please do not hesitate to contact us to learn more about hard money and bridge loans.
