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» Exit Strategies
When funding hard money loans, lenders want to know the exit strategy for the borrower. Hard money loans are bridge loans - they are designed to be in place for about 1 - 3 years. They bridge the gap between the end of construction and profitability or help a company or investor over a cash flow hurdle. They may be used becuase the borrower's credit scores are insufficient to be funded by a conventional bank or the property doesn't meet banking critieria in its current state. Whatever the reason for your hard money bridge loan application, be clear and concise about it when you submit your initial loan application.
Provide the reason why you need a hard money bridge loan and the strategy you have in place to replace that bridge loan with a conventional long term mortgage (also known as a "take-out" loan). Include a timetable for your strategy.
With a logical reason, clear strategy, and timetable for exit, the lender is far more likely to consider your loan request.
