Avatar's Blog
» Building A Hard Money Loan Package - Projections
Many lona requests are accompanied by business plans and projections on which someone has evidently spent a great deal of time. While it is important to develop plans and understand the potential up and downsides of the business or property purchase you are about to engage in, it is not something that will sway a lender.
Lenders rely on prior profit and loss statements, not projections, when determining whether to fund a loan. Now, this is not to say that you should not attach or include a business plan and projections with your loan request. It is good for a lender to know that you have a good handle on your business and a good plan for the future. Just remember to focus on facts - what has already happened - rather than projections as the basis for your loan request. If you are new to the industry or property and have no past financials, discuss this lack with your broker and / or lender. Ask what will be needed to support your loan request instead. In general, the lender will rely heavily on your personal financial statement and on P&Ls from other endeavors you are involved in, if available.
