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High Risk Lenders offer Hard Money Private Equity Loans

If the following situations are part of your financial history you may need to look for a high risk lender: bad credit, slow credit, bankruptcy, no credit history, high debt to income ratio, immediate need for cash. A high risk lender may grant loans to buy property, refinance existing loans, establish home equity lines of credit, and consolidate debt.

If you do not have to put up collateral, this type of transaction is called an unsecured loan. If collateral is required, the property must have at least 10% to 30% equity, the loan term may be longer and the risk for the lender is less.  If the borrower defaults, the property may be seized. If the loan is a personal loan, and not a loan to purchase, for example, a residence, the interest rate will be higher.

You must be prepared to pay a high interest rate, (necessary because of high default rate), application processing charges and other fees. Be sure that you deal with a reputable lender. You can often arrange a high risk loan through a bank, finance company, mortgage company, or a private lender, who may be contacted through a personal loan broker who will charge a fee, called “points”. Dealing with a lender without a good reputation is not necessary.

Can you get a high risk business loan? Yes, but the process will be more involved than in buying a residence. A business plan is necessary with projections of cash flow and evidence of your low personal debt.  If you are expanding an existing business, you’ll need a business credit report and business tax returns.  You may have to sign over property as a guarantee against default.

A reputable lending source will be open about stipulating interest, fees, prepayment penalties and other loan terms. Credit rating and income may not enter into the process. High risk lenders will accept a credit score as low as 500 if you are buying a residence.

Most of these loans are short term and you may have to pay “points” or an up front percentage to the lender. They are a good “stepping stone” to establishing or reestablishing your credit history.

Disclaimer: The hard money loan calculators found on this website are offered only to estimate monthly loan payments. No guarantee is offered or implied as to their accuracy. Hard money loans are non conforming, they do not conform to the underwriting guidelines of Fannie Mae or Freddie Mac. Each private equity hard money lender has their own fee structures which may include points at closing and early prepayment penalties. Discuss all of the details of your particular hard money loan including all costs and fees with your selected hard money lender.