Can You Get a Bridge Loan With Imperfect Credit?

Having sufficient financing on hand is essential for real estate ventures. Whether you’re looking at buying and reselling properties, flipping residential properties, or improving commercial real estate, you likely need a loan to have the money for your projects.

What if your business has a less-than-ideal credit rating? Many banks expect high credit scores for qualification, in addition to good cash flow and revenue.

The good news is that several financing options can help companies with imperfect credit. Learn more about your options and keep advancing toward your business goals.

Bridge Loans for Real Estate Needs

One of our most popular financial tools for real estate businesses is the bridge loan. Also known as a hard money loan, this option focuses provides flexible financing quickly. Thanks to many benefits, bridge loans can be exactly what your company needs to reach real estate goals:

  • Friendly for remodeling: Conventional bank loans rarely cover remodeling expenses. Traditional lenders don’t like the risk associated with fixer-uppers or house flipping in general. On the other hand, our team is happy to help finance this type of project with a bridge loan.
  • Fast: Hard money loans are often approved within a week or 10 days. That can help you get started with properties quickly. When your local real estate market is competitive, having this type of speed is essential to be able to compete. It lets you keep generating profits and working instead of sitting around waiting months for approval.
  • Flexible: In addition to providing funds for remodeling, bridge loans can also be used to pay contractors, buy furniture, upgrade appliances, cover interior design costs, take care of your business’s payroll and handle many other needs. Even emergency expenses aren’t a problem. For example, if a home remodel uncovers something not originally planned for, such as structural problems, you can use the funds to cover the necessary repairs.

In other words, hard money loans are an ideal fit for real estate projects. That’s likely why they’re so popular with our clients. With a bridge loan, you’re always the one who calls the shots, not a bank loan board. You have the freedom to manage projects as you see fit, which helps maximize your potential profits and adapt to the housing market quickly.

Credit Score Requirements and Terms

If this is your first time hearing about bridge loans, all of these benefits may sound too good to be true. We promise that they’re not. When you choose asset-based lending, it’s simply easier to qualify for great terms.

There’s no hidden magic behind these excellent rates. The reason bridge loans are so friendly to small business owners is that they focus on the value of collateral rather than the credit score of the borrower.

Imperfect credit doesn’t disqualify you. We know that many business owners have credit issues. It’s common in today’s economy, especially for small businesses. We prefer to focus on your experience, passion, and drive to succeed.

Asset-Based Lending

In case you’re wondering, collateral is an asset that is used as a repayment guarantee for the loan. This asset helps secure the loan and reduce some of the lending risks. That’s necessary for small businesses to qualify for financing.

Before you start to worry about your business’s assets, though, you should know how bridge loans work. You don’t need to use personal assets or real estate that you already own (though you can if desired). Instead, we often provide financing based on the value of the property you want to purchase and improve.

The loan-to-value ratio determines how much financing you can receive compared to the as-is cost of real estate. An LTV of 70% means you receive 70% of the purchase cost as a loan. To buy a home worth $100,000, you would combine the down payment with a bridge loan of $70,000.

Credit Score Benefits

A hard money loan can even help you repair imperfect credit. Buying low, making several value-added improvements, and reselling real estate can net you significant profits. Part of the money can pay off your bridge loan and another part helps you cover outstanding debts.

At HML Solutions, we have an excellent reputation with real estate businesses. Contact us to learn more about our bridge loans for investment properties.