Line of Credit

Business
Get a Line of Credit
Line of Credit
Others
Payment
Rate
Hard Money Line of Credit

One of the easiest sources of financing for businesses to take advantage of is a hard money line of credit.

A hard money lender is an investor or company that specializes in making cash loans directly to business. These are short term loans that usually come with a high interest rate and have to be paid back fairly quickly.

Some hard money lenders will give lenders a line of credit. A line of credit is financing that a business can tap into at any time. The difference between a line of credit and a loan is that with a line of credit the business only pays interest on the money it actually borrows.

Advantages to a Hard Money Line of Credit

The biggest advantage to a hard money line of credit is that it is a source of funding that is almost always available. The business can tap into it every time it needs cash fast and use it to cover operating expenses if necessary.

Another advantage to using hard money lenders is that they are often willing to offer lines of credit to businesses with bad credit, speculative businesses, new businesses and entrepreneurs in industries considered high risk. Hard money lenders are willing to do this because advancing lines of credit to such businesses is often very profitable.

Qualifying for a Hard Money Line of Credit

A hard money line of credit is also a kind of financing that is very easy and fast to get. Little or no paperwork maybe required. Instead all a business will need to do is fill out a form and prove that it has the cash flow to pay off such a line of credit.

Hard money lenders are interested in cash. If you can prove that you have cash or cash flow you should be able to get a hard money line of credit.

Most hard money lenders will require that a business present proof of cash flow in the form of receipts or banking records. Many also require a credit check or references.

Some hard money lenders will also be willing to accept equity in real estate, equipment, accounts receivable or inventory as collateral for a hard money line of credit. These lenders may go by the name equity lenders or private equity lenders.

Disadvantages to a Hard Money Line of Credit

There are some serious drawbacks to hard money lines of credit that business owners should be aware of. Hard money lines of credit are very costly because they have high interest rates. This means they will be more expensive than kinds of financing.

A hard money line of credit will have to be paid back fairly quickly which means it will cut into future cash flow. This means a business could have a hard time finding cash to cover operating expenses.
Hard money lenders may also impose rigid terms which will make it hard for the business to do anything but pay the line of credit off.

A hard money line of credit is a kind of financing that businesses should use sparingly. A business should only utilize this kind of financing when it has exhausted other alternatives.