Avatar's Blog

During the dot.com boom of the late 1990s, commercial loans were flowing like water. Almost any project could find funding form conventional lenders, private lenders, angel investors or others. Business loan brokers contacted businesses of all sizes pushing, let alone offering, working capital loans for almost any purpose, collateralized by almost anything at all. Terms and rates were favorable to the borrower and money flowed, as new and existing companies 'ate up' the available lending cash.

With the bursting of the dot.com bubble around the middle of 2001, conventional lenders clamped down on lending criteria and the spigot shut off - tightly and quickly. Using more stringent criteria reminiscent of pre-dot.com times, bank – with or without SBA backing – rejected borrowers’ requests. Businesses in need of capital due to falling sales and a weakening economy, found themselves unable to borrow even from lenders who had hounded them to take out loans only several months before.

As the economy tanked, hard money lenders began to flourish. Suddenly, non-conforming loans were being made to borrowers who previously qualified for conventional loans with interesting results. Borrowers who knew previously knew nothing about non-conforming loans, private lenders, hard money loans, etc. became familiar with them. Ironically, the behavior of conventional banks during the dot.com boom helped to lend credibility to this erstwhile sideline of commercial lenders who can issue term sheets in a day and fund ‘on a dime’, as it were. Since conventional banks moved quickly and lightly through the due diligence process during the boom years, the promises of hard money (non-conforming lenders) to do the same as the economic squeeze began to be felt, came as no surprise.

For better or for worse, hard money private lenders became much more mainstream. Some borrowers were appalled at the attitudes, rates, fees, etc. associated with some unscrupulous private lenders. On the other hand, the opportune moment in economic history gave birth to numerous honorable, reliable private lending companies - Avatar Financial Group of Seattle, WA, being one of them.

“At the turn of the century, Avatar’s principals had already been funding hard money commercial bridge loans for more than a decade. We saw the signs in the market and knew it was time for a solid institutionally funded hard money lender to meet the growing needs of US commercial real estate owners and investors,” said Jerry Zevenbergen, CEO of Avatar Financial Group. “There’s an old saying that banks only lend money to people who don’t need it. Because we can work with borrowers during hard times, we can keep the wheels of commerce turning.”

Today, hard money lenders fund an increasing number of loans for the purchase or refinance of commercial, industrial, and investment residential properties. Borrowers in need of speed and flexibility look to companies like Avatar Financial Group for financial support to buy or refinance properties throughout the US. These hard money loans are used to purchase or refinance properties quickly. For manufacturers, they generate working capital to keep wolves away from the door or to gear up for a big incoming order. Hard money lets buyers take advantage of real estate opportunities that would be lost if the deal had to wait for a conventional lender to complete a commercial mortgage. The reasons people seek out hard money lenders varies as widely as the loan scenarios themselves. The common thread is speed, flexibility, and funding criteria based not on the credit scores of the principals, but on the value and equity in the subject real estate property.