Hard Money as an alternative for Companies

Financing, Hard Money Lenders, Private Money
1

A Californian businessperson from Fresno was shocked when the bank he had worked with for the last 25 years rejected his loan application, loan that was needed by the respective company to expand its operations and number of employees. The financial state of the company was good, and the plan to extend the number of employees from 25 to 40 was well documented and viable.

Of course, the entrepreneur was frustrated, so he decided to take his chance with other 3 banks, obtaining the same answer. What was the problem? The banks told him that the credit score of the business was too low. The credit score of the owner of the respective company was 659, while the banks requested a score of 720. For the respective entrepreneur, it was surprising and frustrating, as he was never late with credit payments before. The credit experts concluded that the credit score was affected by the 4 vehicles the entrepreneur owned, as it was considered that those cars generate serious expenses. This might be true, but if the company generates enough incomes to cover those expenses, where is the problem?

It is not right for a bank to refuse a credit application of a client just because he likes cars, especially when the Credit Report looks great from any other point of view. Maybe the respective person has 1 million dollars in the bank, but this aspect seems to be insignificant for a bank, as long as the potential client owns 4 cars.

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2

The amount or types of cars never go into credit scores. Credit scores are determined by the payment history the type of length of credit accounts and the percentage of credit borrowed on loan limits. It doesn’t know if you have a car loan for a Mercedes or a Pinto. It just knows auto loan for the amount and payment history. If your credit score is 659 you have to re-evaluate and start to manage your credit profile. Your credit is not a toy, it is a business tool. Just like a bar owner should not use his bar as a place for him to party he should see it as a place for him to make money your credit is not for buying toys but a tool for acquiring financing for the business. If buying a car will put your debt profile in a negative position then you have to do something else.

The decision to grant a loan will be based on other factors in addition to credit scoring. Bankers are not always correct when they decide to loan money but they are always right when they decide not to loan money. They may see something in the types and amounts of cars you have coupled with other behaviors that makes is less likely that you will repay the loan. In any event take the feedback that these bankers gave you as to why they won’t loan the money and fix it because I guarantee that whatever they told you the reason for denying the loan was will happen if you don’t change something. Look at it as free business consultation.