What Does It Take to Get a Hard Money Loan in Salt Lake City?

Hard money is a foreign concept to most consumers thanks to its specialized nature. But if you ever have need of it, hard money financing could prove invaluable. The big question is this: what does it take to get a hard money loan in Salt Lake City – or any other American city for that matter?

Salt Lake City’s Actium Lending is the leading Utah hard money lender. They say the first thing consumers need to know is that hard money loans are not intended for consumer purposes. Lenders target commercial applications like real estate investing, business expansion, and debt restructuring.

If you’re looking for hard money to buy a primary residence in the Beehive State, you are barking up the wrong tree. Traditional banks, credit unions, and mortgage lenders are the ones to help you. Hard money lenders will not even look at your project. With that said, here is what it takes to get a hard money loan in Salt Lake City:

1. A Supported Goal

The starting point is a supported goal. A supported goal is a financial goal that lenders are willing to back. For example, the vast majority of Actium’s loans go to investors acquiring new properties for their portfolios. Actium lends to investors looking to purchase office buildings, industrial parks, multi-family rental properties, strip malls, etc.

Although Actium does not get involved in land development or fix-and-flip projects, other hard money lenders do. Some even specialize in the highly risky fix-and-flip venture. Regardless, your need needs to be something the lender is willing to support.

2. Valuable Collateral

Hard money approvals are based on assets. In order to borrow, you would have to bring some sort of collateral to the table. Loans intended for real estate purchases tend to be secured by the very properties being acquired. But in a business expansion or debt restructuring scenario, a borrower would be more apt to offer business equipment and other assets. If the business owns real estate free and clear, it could be utilized as collateral under most scenarios.

3. A Reasonable Amount of Knowledge

If you hope to secure a hard money loan in Salt Lake City, you have to possess a reasonable amount of knowledge about what you are doing. Hard money lenders would not demand that you be a real estate expert or an investor who has never made a bad purchase. But you at least have to demonstrate baseline knowledge of how real estate investing works.

4. A Substantial Down Payment

Hard money lending is risky for lenders. Therefore, it is rare for them to finance a project 100%. Most require significant down payments that tend to be higher than what traditional lenders require. This is to protect the lender against substantial loss.

5. A Reasonable Exit Plan

Borrowers looking for hard money must have a reasonable exit plan. An exit plan is essentially a plan to repay the loan no later than its maturity date. Actium says most of its clients turn to traditional refinancing. They use a hard money loan to complete the acquisition, then refinance the property with a traditional loan.

6. A Willingness to Think Outside the Box

Finally, you will need a willingness to think outside the box if you hope to get a hard money loan in Salt Lake City. Hard money lenders don’t do things the same way as their traditional counterparts. Their processes, speed, and flexibility take some getting used to. But once you are comfortable with hard money, it is one of the best ways to finance commercial real estate projects.