Whether it’s for business or personal use, when you need money, you need it now. That’s why when you’re seeking loan approval, you want your answer ASAP. To help you get your money and get it now, Fidelity Funding out of Glendale, California presents our keys for getting Hard Money Lenders in Los Angeles to approve your loan as quickly as possible.
The first step to getting your loan approved as quickly as possible is to think like a lender. What we mean is to consider the things that a lender will want to know in evaluating your loan application. Why should the lender feel comfortable making this loan to you? What assurances are you able to provide that the lender will be paid in full under the terms of the loan? To help you think like a lender, here are a few things you should consider:
One critical fact that a potential lender will want to know is what the loan is for. Different regulations apply to loans that are for personal purposes versus business use, and so it is important to make this distinction before you apply for a loan. Also, being able to explain to what use you intend to put the loan proceeds will help a lender gauge the risk.
For example, if you want to take out a loan to pay for renovations to a property that also acts as collateral for the loan, the lender can consider whether or not those renovations are likely to add to the value of the property. Similarly, if you plan to invest the loan proceeds into growing your business, the lender will want to know in detail exactly how the money will help you expand and what this is expected to mean for your cash flow. Having all of this information prepared in advance will go a long way toward speeding up the loan approval process.
Another important step in thinking like a lender is to consider what will act as security for the loan. Frequently, a loan is secured by a mortgage placed on a piece of real property owned by the borrower. However, loans also can be secured by non-real property, such as business equipment. In some instances, a business loan may be secured by a piece of personal property, such as when a business owner secures a business loan by placing a mortgage on his or her private residence.
Having an idea of how your loan would be secured before you go asking for a loan will go a long way in demonstrating for a potential lender that you are deserving of being trusted with their money. It shows that you have an appreciation for the fact that a loan is not a handout and that the lender has a valid interest in ensuring that the money is repaid according to the loan terms.
When considering how your loan would be secured, it is not enough to simply identify a piece of property and say it can serve as collateral. The value of the property itself—whether a building or a piece of farm equipment—must be sufficient to secure the entire value of the loan, ideally with a decent amount of cushion in case of a reduction in property value.
For example, it is unrealistic to ask for a $100,000 loan secured by a $50,000 piece of property. That is not a good example of thinking like a lender. Asking for a $50,000 loan secured by a $100,000 piece of a property gives a potential lender a strong sense of security. Such a loan clearly entails significantly less risk and is therefore likely to be approved much more quickly.
When applying for a loan, you are essentially pitching your case to the lender as to why the loan you are requesting represents a good investment for them. As such, you will need to offer evidence demonstrating the validity of what you are saying. The more evidence you are able to supply, the more quickly the lender will be able to make a decision on your loan application. But just what sort of evidence will you need?
For good reason, a lender will not simply take a potential borrower at his or her word that all of the information contained in the loan application is true. In order to support your application, you should obtain documentation supporting every fact that you include in your application. In many instances, government regulations require that lenders obtain such information.
When determining which documents you will need, consider your answers to the questions under Tip #1. How will the loan be secured? If the loan will be secured by real property, you should be prepared with a recent appraisal or other evidence of the property’s current fair market value. A simple printout from Zillow is unlikely to be sufficient but maybe a good starting point. The same goes for any non-real property, like business equipment, that you intend to offer as collateral.
If you are applying for a business loan based in part on your business’s cash flow, you should be prepared to present detailed statements providing information about profits and losses, cash flow, and other core details about the financial health of your business. Again, the more of this information that you are able to provide up-front with your application, the more you will avoid unnecessary back-and-forth with your potential lender down the line, thereby speeding up the process for their reaching a decision on your loan.
After you submit your loan application, it is likely that the potential lender will come back to you with further questions or requests for additional information. One of the best things you can do to speed up the loan approval process is to provide this information as quickly and thoroughly as possible, including by trying to anticipate the lender’s questions in advance and providing as much information and documentation as you can in the first instance. Letting a potential lender’s questions go unanswered for longer than absolutely necessary only means further delays for you.
In conclusion, the best thing that you can do to speed up the process for getting a loan is to anticipate the potential lender’s needs and questions in advance so that you can provide all necessary information without their having to ask for it down the line. Also, the stronger of a case you can make as for why your loan should be approved, the faster the approval process generally will go.