Working capital is the lifeblood of any business. It’s what allows you to meet cash flow obligations, to fund new staff when demand rises, and to load up on inventory for those busy times. Whether you’re meeting client needs with a large rush order or just working on your regular growth plan, finding consistent access to capital even when you are between customer payments can be difficult. Many businesses use hard money loans to raise that capital on demand, smoothing out the company’s ability to be responsive when demand changes.
The principle is simple. The loan provides the capital you actually use. Then, when you make sales or customers pay invoices for prior deliveries, you pay the loan with that income. Any additional money becomes your profit and can be put into reserves or taken as dividends. It makes cash management easy while providing the capital needed to take advantage of those surprising opportunities.
Getting Approval for Private Loans
One reason these loans are attractive to small companies is their accessibility. Hard money lenders typically do not have the stringent credit requirements that banks do. Since these are working capital loans and not high-value acquisition loans, they also present a different level of risk and commitment. Still, if you want a deep well of capital you can use for big projects or for months of cash management at once, you’ll want to consider using a secured loan.
Secured loans use real estate or other assets as collateral. Hard money loans that do this are typically much less expensive than unsecured loans of the same type. They also tend to be approved for much higher amounts. In fact, the upper value of the loan is pretty much dictated by your collateral value. The more expensive the assets you offer, the bigger the loan you can get, within the limits of your ability to repay.
Since hard money lenders work with borrowers seeking fast approvals, they build the application to suit. Credit checks help calibrate your interest costs, but the important factors are the collateral value and your business income. Provide the information needed to verify those things and approval is relatively quick and painless, even when you have less than perfect credit.
Finding Hard Money Loans for Your Business
Hard money lenders operate in every state, and several of the larger ones also operate nationally. It isn’t hard to find a lender willing to work with businesses in your area. The important thing to remember is that every program is different. Be sure to take your time to shop for the right deal.