Bank loan VS private money loan

Always we take loan for our business or other personal needs. We take loan from bank or private investor or other organization.

Every business owner wants a bank loan for his business. In fact, many of them think that bank is the only place they can get a business loan. But this is not true.

Why everyone wants to take bank loan?

The answer is very simple and meaningful. It is usually because bank interest rates can be lower than other loans interest.

1. Why do bank loans offer lower rates?

• Banks typically have a lower cost of funds than other lenders. Because, there are many depositors/customers who keep a lot of money in the bank. Thus, banks have easy access to those funds to lend out. And, if banks don't pay interest for those deposits or pay very little interest like they do today then those funds are very cheap for the bank to use.

2. What are the requirements for bank loan?

• For getting loan from bank, we have to be maintaining some bank rules. Such as we should have good condition of credit. After that why we take loan? How much will profit from it and its future? Etc.

If anybody has bad credit then he/she will directly disqualify for bank loan. After fulfilling their rules, they are giving you bank loan. Otherwise not. 

1.What is hard money loan?

Hard money loan which is a specific type of asset based loan. Hard money loans are typically issued by private investors or companies. This loan is also known as private money loan. Actually hard money lenders are giving you loan by your property value. Hard money loan is a short time loan process for some months or years only. Although, it is depend on lenders choice.

2.What is the interest rate of bank loan?

The interest rate of hard money loan is greater than any other residential or conventional loan. The rate is not dependent on the Bank Rate. It is instead more dependent on the real estate market and availability of hard money credit. Sometimes lenders are giving you 65%-75% LTV (loan to value).  As of 2008 and for the past decade hard money has ranged from the mid 12%–21% range. That rate can be increase up to around 25%–29%.

Bank loan is good. If you are not able to fulfill their condition then hard money loan is the last and first choice for you. For hard money loan need not much condition, easy to get, need short time.

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