Avatar's Blog
» Income to Expense Ratios
Avatar Financial Group looks to see that borrowers have a 1.2:1 ratio of income to expenses, including the Avatar loan before funding a hard money commercial loan. when presenting Profit and Loss statements for the subject property or business entity that will support the loan payments, look to see that this ratio exists.
It is prudent to run this financial exercise before submitting a loan to Avatar or to any other hard money lender. If your numbers don't pan out, this loan will probably not be good for your business in the end. If the business or subject property will not support the loan, you can add profits from another business venture or personal funds to make up the difference. In that event, as the subject property will running at a loss, it will be important to demonstrate why the loan is valuable to you under these unusual circumstances.
Hard money lending, like any other kind of lending, is a numbers affair. If the loan makes sense for the borrower and the lender, the loan can be completed. Focus on demonstrating this to the lender.
