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A Good Loan Package Key To Hard Money Loans
By Tony Seruga, Yolanda Seruga and Yolanda Bishop
What is a Hard Money Loan?

A hard money loan is a certain type of loan in which the money is given for a specific purpose. The amount of the loan is based on the approximate value of the real estate in question. Needless to say, hard money loans are rather expensive loans with whopping interest rates and very few people go after them but for those who have no other choice, the key to a hard money loan in time of need is a great loan package.

What is a Loan Package?

Just to be clear, a loan package is a packet of information filled in with all of the information that you need in order to get a loan. In a sense, a loan package is a type of presentation or portfolio that you present to the prospective lender in the hopes of getting a loan. A good loan package has covered all of the bases, answering all of the questions a lender may have about the property in question and making them want to know more. The loan package should answer any fears or reservations that the lender might have had about the prospective risk they would be taking on.

Three are certain things that every good loan package and without a good loan package, getting a hard money loan can be one of the most difficult things to do, especially if you do not have some type of Plan B. Not only should a good loan package explain to the lender why you need the money, but it should provide information about why the loan is necessary in the first place and all of the reasons why they are funding a good investment. In essence, outline your entire plan; your loan package is a blueprint to how you are going to spend the money should you be granted the loan, and how well it will be used.

What You Need:

-First of all, have a mission. If you have a company and the company has a mission statement, include that. Let the lender know exactly what it is that you are trying to get accomplished, and exactly how you plan on making sure that you accomplish this goal should they provide you with the necessary funds to do so.

-Second, have a five year plan spelled out in plain English. You can say that you plan on being number one in the industry by 2013, but how do you plan on doing that? If you don't have a plan, make one—lenders are going to want to know.

-Make sure that you include any financial statements

and other information related to the finances involved in this project. If you have already put some of your own funding toward this project, be sure to include hard proof of that so they can see that the risk is also worth the investment to you, and that you would use your own money in place of the hard loan if you were able to.

-Also related to money, make sure that you demonstrate the ability to take care of and properly manage your money. Nobody wants to lend money to a person who is going to blow it off, and that is the truth.

-Have a backup plan. Show that you are able to bounce back from negative circumstances. If you experience a drop in productivity or sales or some financial setback, show how you will be able to make payments on your loan in good faith and keep your project afloat at the same time.

-Show the lender what you can really do. Present you 'vision' as you see it, and where your business can end up—with their hard money loan assistance.

The truth is that most people in search of a hard money loan do not present good loan packages and this is where they make their first mistake. You have to show the loan company that you are able to deal with setbacks—because the truth is that every business experiences setbacks at one time or another. In addition, you have to be able to prove to the prospective hard money lender that you do have a plan and that you have things in the works that you are putting effort towards in order to be successful. Lastly, you have to be able to prove to the hard money lender that you cannot do it without their help; without the right amount of money, your business cannot get anywhere and you have to prove that the loan is for a good reason. Again, if you are able to show your own financial efforts put toward this project that strengthens your case even further.

Anybody who is in the position to deny you or approve you for a loan is an intelligent individual, at least on some level. Appeal to their analytical and intelligent side, and give them a proposal that can really knock their socks off, making it so that there is no way they could possibly turn you down for the hard money loan you need with the great loan package you have presented.

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