As I started writing this week’s blog, I sat with my freshly poured cup of coffee in hand, took in the scent of that roasted morning hug and looked outside to the dark, menacing winter clouds through my rain-blurred office window, and it got me thinking. Owning and running a business is demanding and challenging on the sunniest of days. Then there’s this thing called life that can swoop in like a winter storm and wipe out operating essentials in a matter of minutes. It’s not only unpredictable; these situations can often feel daunting, cumbersome, and hopeless. Sometimes it feels as if that storm will never pass – that ray of sunlight will never shine.
I know what you’re thinking. “Geeze, Joe, way to start off positive!” But here’s the deal. The sun will shine, and we can often make it happen. Let me tell you the story of our client; we’ll call her Rachel for privacy purposes – she is a diaper specialist.
You read that right. Rachel runs a business out of her garage that makes themed diapers for incontinent dogs and cats that caters to high-end clients with a passion for their pets. Who would have thought, right?
When Rachel launched this business, it was a family affair. While Rachel handled production, her mother helped her with bookkeeping. Things were going great; orders were consistent, and business was growing. Then one of life’s storms rolled in – Rachel’s mother suddenly passes away. Not only was this an extreme personal loss for Rachel, her mother’s passing left a void and disruption in service. The situation was so overwhelming that Rachel made a late payment on her mortgage. As a result, Rachel found herself in a financial bind with orders to fill.
After talking with her friend at the bank, she realized that her credit, which was affected, wouldn’t allow for a traditional bank loan. At the advice of her banker, Rachel turned to Google for a little help. As a result, she found Toner Real Estate Solutions and reached out to us and shared her story. We went over the structure and productivity of her business with a follow-up visit to her location. It indeed was the “Toys “R” Us” of diapers. It was impressive, and to boot, her sales volume was thriving, her business was sound. She just needed a little capital to order material and supplies while finances got back on track. As a result, we were able to provide the funds Rachel required to get her back in business. What did Rachel need to make this happen? First, let’s cover a few private lending basics.
Definition
A private equity-based money lender is a non-institutional (non-bank) individual or company that loans capital (Toner Real Estate Solutions), secured by a note and deed of trust for a business purpose, typically the purchase of real estate.
Process Overview
In our initial meeting, we will sit down and go over your current situation. We will then make sure your need meets the criteria for a successful private loan. The following are a few of the ways we evaluate if your situation would be a good fit for a private loan. Remember, often you’d only need one or two of the following to qualify:
- Own investment real estate (no mortgage or very small mortgage) to borrow against
- Possess 30% down cash payment or equity
- Need the funding for business purposes only
Once we make sure your situation matches the criteria above, we carefully comb through the details. Sometimes a private loan is a perfect fit and other times it isn’t. No matter what the situation is, we will always guide you in the right direction. But first, let me explain a little bit more about the nature of private lending.
First, private equity-based loans are not the front line of defense when it comes to solving financial challenges. Private loans sometimes known as “hard money” are not payday loans (consumer loans) – that is for another blog entirely. Private equity-based loans are typically short-term (12 months or shorter), higher interest loans that are meant to help a borrower for the short term. They are a potential option when bank lending fails.
If you are new to this process, we always recommend that you explore all options. Bank loans typically offer lower interest rates with longer terms. Regardless if you become our client, It is just as important to us as it is our borrowers that loans are set up for success from the get-go.
Secondly, we take a holistic approach to every business situation. This means that even if your case meets our criteria, a private loan may not be the best solution. Our most important goal is to set you up for success. If there is anything that comes along that will interfere with that goal; we would not approve the loan and discuss other options. We are here to guide you through a process, not just supply a band-aid.
Lastly, after carefully navigating everything involved and we determine that a private loan looks like a good fit, we then match your financial needs with the loan that is best fits your needs. From there, it is business as usual – much like a conventional loan. We draw up the necessary paperwork with the appropriate details.
Conclusion
We specialize in solutions. We offer private equity-based loans, with long-term relationships. Above all, we are committed to providing you with an integrative approach with personalized guidance.
If you or someone you know could benefit from private lending, please give us a call or shoot us a message. Here’s to sunnier days ahead!
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