Private funding can be a great option for corporations or limited liability companies (LLC’s) when they need a quick infusion of capital. Several scenarios are suitable for your company to seek a hard money loan:
- Real estate purchases
- Ventures that require quick action
- Bridge loans
- Construction projects
Hard money loans have advantages over traditional loans in these scenarios because of their speed and efficiency. While traditional lenders have long, complicated processes that they must go through to approve loans, private funders can move quickly to get you the financing that your project needs.
Utilizing an LLC or corporation as the vehicle for your business transactions has several advantages. Although there are no legal conditions which require that private loans be given only to corporations or LLC’s, it will greatly improve your chances of obtaining a hard money loan. This is because there are added risks to loaning money to individuals. For example, even though the loan documents may clearly state that the land is not to be used by the borrower for residential purposes, if the owner occupies the property, then it can expose the lender to liability under the Dodd-Frank Act. Additionally, if the owner moves in and the hard money lender needs to foreclose, then the foreclosure process becomes much more complicated. This is why some private lenders will only provide loans to incorporated organizations.
If you wish to obtain a hard money loan and your property is not already in an LLC, you can form one and transfer the property into it to meet this requirement. Additional advantages to forming an LLC include the protections inherent in such a company, such as limited liability. An LLC’s liability is limited to its assets, and its members are protected from personal liability.
At PB Financial Group, our mission is to support you and provide for your financial needs. If you are seeking to obtain a hard money loan in Los Angeles, contact PB Financial Group at 323.935.5555 or visit www.CalHardMoney.com for further information.