This question is probably the one I get asked the most. How do I choose the right lender? It doesn’t matter if it’s a potential client or even my close friends, my answer is all the same. Do your research. If you go the traditional route be prepared for your deal to be scrutinized. Do you have enough collateral? What will the level of cash flow from your investment be? How is your credit? While these are standard lender questions, a bank will base their decision on these hard facts which in most cases could mean a rejection. When it comes to private lenders, you will have a much better chance. But the question still remains, how do you choose the right lender? Here are four factors to keep in mind:
Industry experience: To me, this is at the top of the list. You want an established company that has built a strong reputation within the lending industry. Not a flash in the pan. Remember, it’s not about the overall lending industry, but how well they know your particular niche especially when it comes to land loans. At Silver Arch Capital Partners, we have a team with decades of experience that has handled everything from completing a $3.5 million loan for a condominium in Chicago’s Gold Coast to a $21 million loan for the famed Jockey Club in Miami. Each deal has its own nuances that an experienced, knowledgeable lender should be able to handle.
Loan programs: Private lenders offer a variety of bridge loans to suit your project needs like restructurings, discounted payoffs, property improvements, and working capital. The right lender will work with you to lock in on the best mortgage rates at the most favorable terms. At Silver Arch Capital, we offer hard money loans for hospitality, multifamily, industrial, retail, and others. Again, the more lending options a private lender can offer, the easier it is to find the right funding solutions for your project.
Communication: This too is an important factor for a deal to go smoothly. You want to know everything there is about it, which includes the entire process—from the loan application right up until the closing. The right lender will not only keep you informed of all these steps, but be able to answer your questions in terms you can understand.
Closing: Here your needs should be twofold. It’s not just about closing, timing is also a factor. If your deal is time-sensitive, you want a private lender who can deliver the capital you need fast, so you don’t miss out on the deadline. When a $30.4 million loan closed to help launch the Cachet Hotel in New York City time was definitely a factor.
Again, this is your project. So it all comes down to being prepared. Do your homework. Understand not just what you need out of this hard money loan, but what you need from your lender to ensure this deal will be a prosperous one.
Got a commercial lending question? Comment or email at info@silverarchcp.com.
