Cliffrock Private Lending is an effective provider of hard money lending capital. As a privately funded lender we will seek to be sufficiently responsive to your needs including speed in delivering a preliminary indication of interest. We are motivated in funding loans and building repeat-business relationships.
A number of reasons drive the interest of a real estate investors seeking hard money loans. These include, but are not limited, to the following which oftentimes are driven by an inability for lenders to have the requisite flexibility or a project to fit within traditional lending guidelines.
- Impaired or unsatisfactory credit – There are instances whereby a real estate borrower is seeking debt capital but does not have the credit worthiness to support the application from a traditional lending institution. These may include damaged credit in the process of being rehabilitated, or insufficient reported income levels creating high reported debt to income levels. This will create challenges when seeking debt financing from a bank that underwrites significantly to the wherewithal of the borrower. Hard money lenders seek to underwrite primarily to the underlying hard real estate collateral.
- The real estate and the project being undertaken do not meet traditional lending parameters – Recognition that entrepreneurial real estate investing is not a “one size fits all” approach in every instance and that the provision of debt capital requires flexibility. Not every loan is a conventional request, instead requiring recognition of each project’s nuances and structuring for customized solutions as opposed to an “in the box” analysis typically undertaken by banks. Banks and traditional lending institutions have generally become more conservative and stricter in their lending criteria, partly driven by added regulation and stifling willingness to solve for a creative solution that may be warranted.
- Speed in decision-making – Hard money lenders are typically flat or collapsed hierarchical structures with the ability to move swiftly from qualifying a loan to underwriting to funding and finally to closing. It is not atypical to see traditional lenders seeking 4-6 weeks of processing, due diligence, and investment committee sign-offs, at times more, before being able to deliver a firm commitment. This timing does not often work for a borrower who requires a swift application and commitment.
- Pricing relative to other forms of accessible forms of borrower capital – Recipients of hard money loans ultimately recognize that pricing of hard money loans is oftentimes more competitive to the costs of other forms of financing when seeking to fund projects of this nature. Borrowing without providing the hard collateral on a secured first lien funding basis (such as use of credits cards or other forms of unsecured debt) typically results in significantly higher costs of capital and may not have repayment terms as accommodating and predictable as a hard money loan.