a group of men in orange vests and helmets at a construction site

Planning to raise funds for a construction project? Consider a hard money lender. A hard money lender in Northern California offers loans based on the value of collaterals, in addition to borrowers’ creditworthiness. Hard money loans are usually offered by private investors or lenders. Unlike traditional loans from banks or credit unions, hard money loans are secured by the value of the property being purchased or renovated.

Why use a Hard Money Loan to Fund Your Construction Project?

There are several benefits of hard money construction loans. The hard money loan approval process can be less stringent than for traditional loans, with more focus on the collateral than on the borrower’s financial position.

Credit unions and banks have a lengthy, complex and cumbersome approval process and can take several weeks or months to sanction a loan. When it comes to construction projects, time is money. If you opt for a traditional loan, you may end up waiting for months before your bank releases funds. This could mean lost opportunities and costly delays. Because hard money lenders have less stringent requirements, hard money loans are usually approved in a matter of days.

Hard money lenders in Northern California are often more flexible regarding loan terms and requirements. They can customize loan agreements to suit the specific needs of borrowers.  Some hard money loans do not have prepayment penalties, allowing borrowers to pay off their debt early at no extra costs if they choose. Many hard money lenders are willing to offer loans to applicants whose loan applications were rejected by banks or other traditional financial institutions.

Qualifying for a Hard Money Construction Loan

A hard money lender typically stipulates that a borrower must possess a large amount of equity in the property. This requirement is logical as the more equity a borrower has in the property, the less risk there is for the lender if the borrower fails to repay the loan. Hard money lenders typically lend up to 65% of the value of the project budget.

While in most cases, a lower credit score may not make or break your hard money construction loan application, some hard money lenders will consider your credit score. A good credit score usually leads to more favorable loan terms. Some lenders only lend to individuals with prior experience.

When performing a risk assessment, a hard money lender will want to assess the applicant’s financial health which may involve looking at their latest bank statements and tax returns. A financial health assessment is performed to check if the borrower can meet their EMI obligation. Before approving your application, your lender may want to look at complete architectural plans and analyze the scope of work.

Altus Capital Group is a leading hard money lender in Northern California. We provide a diverse array of financial solutions designed to cater to the distinct financing needs for business purpose loans. To learn more, call us today at (707) 932-5887.