The tradition of starting a business in the United States usually involved going to the bank and requesting a loan to help fund your startup. At one time or another, all major giants from Walmart to Amazon began as a small business that grew into something far greater than their respective founders could have ever imagined. This standard procedure of getting a loan is changing, however, thanks to the introduction of hard money loans which are based more on collateral than what a bank would judge you upon. That is why the following list of the top three reasons hard money can help a small business has been created. They are, in no particular order, as follows:
- Much Faster Than Traditional Loans
- Creditworthiness Not A Concern
- Allows Small Businesses To Take More Risks
Much Faster Than Traditional Loans
Traditional loans take a long time to get approved. The loan documents get passed across the desk of multiple people at the bank and there always appears to be holdups. That’s not to mention the extensive application process that takes forever and can be extremely confusing. Luckily, the process of getting a loan through hard money is much simpler and, perhaps more importantly, much faster. This means a small business can get to work faster and start earning profits. If too much time passes, your opportunity to capitalize on market trends could be minimized so it is imperative to act with speed and precision at all costs.
Creditworthiness Not A Concern
Banks sometimes pay far too close attention to someone’s credit score. Financial mistakes when an entrepreneur was young and inexperienced can still be reflected decades later once they have learned the ins and outs of a business and are in a much better place financially. Hard money allows small businesses to receive money for expansion regardless of the owner’s credit score. This allows them not to be unfairly punished for mistakes made long ago.
Allows Small Businesses To Take More Risks
Getting funding from banks and even some investors requires a high level of scrutiny on not only the business model itself, but also the executive team. Most lenders seek to minimize their risk and are hesitant to part with any capital unless they can be assured beyond a reasonable doubt that the fruits of the small businesses labor will be worth it. Hard money allows the small business to take a bit more risk as long as they both have the collateral to acquire funds and believe in themselves enough to risk losing that collateral. Sometimes, the biggest risk takers are those who are the most successful.