Avatar's Blog
» Is This Hard Money Loan Affordable?
Posted on 8/30/2005
Posted in Miscellaneous
Avatar Financial Group looks for answers to three questions when determing whether to fund a loan.
- Does the subject property have sufficient value to serve as collateral for the loan?
- Can the borrower afford the monthly payments?
- Does the borrower have a workable exit strategy?
In answering the second question, Avatar looks at P&Ls (profit and loss statements) from the entity that will support the monthly loan payments. You should be able to prove that you can bring in at least 1.2 times your monthly expenses - in other words, show on paper that you will have a few dollars left to put in your pocket at the end of the month after all bills are paid, including the Avatar loan. This demonstrates that you can afford the loan. If you should run into an unexpected expense, you will still be able to manage the loan and thrive in business. Avatar makes loans that make sense for the borrower as well as the lender.
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