Avatar's Blog

The first stage of a private money loan approvals is the issuing of a Letter of Intent. When you submit a loan to Avatar, your loan is reviewed to be sure we are a good match for your needs. If the LTV, loan size, property type and location, and borrower equity ratio is sufficient, then a Letter of Intent is issued to you.

The LOI is generally emailed to the broker of record who then forwards it to the client. To get a Letter of Intent, be prepared to provide the following:

• Photos of the Subject Property
• Personal Financial Statement on the Borrower(s) / Guarantor(s) of the loan
• P&Ls from the entity (last year and YTD this year) that will support the interest only monthly loan payments.
• Executive summary

The executive summary is an important element of the loan package. It should contain information about the borrower, the object/purpose/use of funds of the loan, length of time the funds will be needed, why the borrower is seeking hard money rather than a conventional mortgage, exit strategy and any pertinent info that will help Avatar to determine whether this is a loan Avatar is prepared to fund.

Keeping information about 'skeletons in the closet' or 'bumps in the road' hidden at this time is a costly mistake for borrowers and brokers alike. Once the LOI is issued, the borrower will be asked to sign and return the Letter and wire (or pay via online form) a down payment toward the third party costs of due diligence. If the full lending scenario is not disclosed before the LOI is issued, that information will come out during the due diligence process. It does not serve the borrower well to have the down payment funds spent in pursuit of a loan that does not meet lending criteria when a quick yes or no is possible without any expenditure of funds.

Brokers and borrowers are encouraged to provide complete information about the loan situation and borrower when submitting the initial loan scenario. Within a few hours, you will have a reliable answer from the CEO and/or president of the company - a response you can count on. For more info or assistance with submitting loan requests, email gillian@avatarfinancial.com.