Banks are not known for quick financing. These are conservative institutions that follow strict rules in lending money. As a financial institution, they are concerned about getting their money back from borrowers.
Investors, on the other hand, lend money even at a higher risk. Since they don’t follow the strict rules of banks, they can process loans faster. When investors provide hard money lending facilities in Palm Beach, Florida, they look at the borrower’s asset and capacity to pay. They are less concerned about the person’s credit standing.
Collateral
A person’s capacity to pay is related to his income and assets. When a businessman needs additional funding, he usually goes to his banker. However, there are instances when he is no longer eligible for a loan. He may have outstanding loans or he may have a low credit score and is not fit for the bank’s loan criteria.
Even if a person has assets that can serve as collateral, these may not be enough for the bank to give him a loan. Unlike banks that look at the person’s financial health and history, investors only need to know if the borrower can repay the loan and what collateral does he have. They are not afraid that the borrower might default on the loan because the collateral is more than enough to cover it.
Filling Short-Term Needs
These loans have high interest rates and the borrower has every reason to repay the loan as soon as possible. These loans may also be paid in advance. Typically, the loans last from one year to five years. Lenders and borrowers usually create a bond of trust for repeat loans.
When a businessman needs money, he can trust to get a loan from a lender or investor he has already worked with. Lenders and borrowers need each other, especially when the borrower has repeat requirements.
