Monday, November 08, 2010

QUICK INTRODUCTION TO PRIVATE MONEY LOANS

BELOW YOU’LL FIND INFORMATION THAT CAN INCREASE YOUR CHANCES of getting private money funding. Understanding the ins and outs of private money could make the difference between getting money and not getting money. However you don’t need to memorize anything and there will be no test on this material).

WHAT MAKES A LOAN A PRIVATE MONEY LOAN?

1. Traditional institutional lenders like banks, trusts, pension funds, or credit unions are not private lenders, although some have units that deal with private money.

2. Private lenders may be individuals, corporations, venture capital firms, limited partnerships or certain other types of business entities.

3. Private money loans are typically non-conventional commercial real estate loans secured by real estate. They are often called hard money loans.

4. Hard money lenders make private money loans. Many private money lenders make hard money loans.

TWO MAIN TYPES OF PRIVATE MONEY FUNDING ARE:

5. Loans for business or real estate , which must be paid back over time

6. Investments in a business or real estate project, which do not have to be paid back.

Investments come from wealthy private individuals (“angels”) or groups such as venture capital (VC) firms. Investors may take part ownership of a business to earn a return on their investment as the business grows.

POTENTIAL ADVANTAGES OF PRIVATE MONEY include:
7. Private lenders are less bogged down by bank paperwork, government regulations and institutional protocol

8. Time from initial loan request to funding is faster

9. Private money loans are more flexible. For example, private lenders and investors are more likely to offer funding to “high risk” business or real estate deals.

BORROWERS CAN USE PRIVATE MONEY LOANS for many business and real estate purposes, although lenders can restrict loans to specific uses. Common purposes of private money loans include:

10. Rehabbing a property

11. Acquiring bridge money

12. Providing short-term operating capital

13. Equipping an office or research facility

14. Making a down payment on real estate

15. Buying real property

16. and more

PRIVATE INVESTORS

Business Angels are wealthy individuals who invest a portion of their money into real estate or a business in the hope of making a good return on their investments. These investors may come to the rescue of a new and promising business that finds it hard to obtain financing. They generally seek companies or projects that:

 Show great profit potential
 Will grow fast
 Are more than small “mom and pop” types of businesses

Monday, November 01, 2010

CREDIT UNIONS—THE UNKNOWN AND UNTAPPED LOAN SOURCE

IF YOU’RE LOOKING FOR A REAL ESTATE OR BUSINESS LOAN, be sure to include local Credit Unions in your search. Why do we suggest this? Because, Credit Unions:

• Have not suffered from bad real estate loans in the current crisis.
• Have loads of cash they want to put into good loans.
• Have understanding boards of directors who want to “put money out.”
• Have a history of lower interest rates on loans than many other lenders.

CREDIT UNIONS MAKE MANY DIFFERENT TYPES OF LOANS. But the types that would
interest you most as a business person are:

• Commercial and residential real estate loans.
• Business loans for startup, expansion, renovation, etc.

TO GET EITHER TYPE OF LOAN, the borrower must meet certain minimum, low- or no-cost needs, namely:

• Be a member of the Credit Union from which you want to borrow. There’s NO charge to you to join a Credit Union.
• Fill out the Loan Application for the type of loan you seek.
• Agree to the repayment schedule the Credit Union sets.
• Sign all needed documents—which usually are fewer than with a bank.
• Receive your loan check and start making P & I (Principal and Interest)
payments one month after you get your money.

THE “WAY TO GO” TODAY IS “WHERE THE MONEY IS” and that’s what you’re doing when you seek your real estate or business loan at a local Credit Union. You’ll get a friendly reception and utmost cooperation when you submit your Loan Application in a businesslike way and treat the CU staff courteously.