How Benefits of Payday Loans
Retail Business Woes And Hard Money Loan Seasonal Solutions
Danielle Lopez
Any plan that successfully improves profit margins by riding seasonal increases in customers could put a troubled retail business back on a proper fiscal track. A solid seasonal strategy may require infusing more liquid cash into the company. What happens when you need to borrow money in order to carry out your plans and no lending institution wants to approve traditional financing?
A hard money loan borrowed against your real estate holdings could provide an answer:
Catering to the Seasons
Consider the following example.
A business might have its ups and downs during the year. The high seasons of the year could be present a very narrow window for the business to take advantage of. A retail seller might find the winter holiday season delivers the bulk of the year's profits. A health and fitness store likely sees a lot of New Year's resolution pre-summer month's "beach body" customers.
Retail businesses relying on a huge influx of customers during a short period of time surely require having a lot of product in stock. Without a reliable source of funding, procuring the what you have to sell is not going to be possible. This is where the aforementioned hard money real estate loans potentially provide a desirable solution.
Hard Money Equity
Not everyone might consider borrowing a hard money loan against a home because they may not need a significant amount of money to fund a business venture. Hard money loans are viewed as a form of a second mortgage since you can borrow up to 70% of the home's value.
Do not be too quick to dismiss this type of loan.
"Up to 70%" is not the same as "only 70% and no less". If you only need to take a loan equivalent to 20% of the home's value, negotiating with hard money lenders for, essentially, a variant on a home equity loan is a possibility. Just be mindful that the interest rate on a hard money loan is going to be far more than a traditional home equity deal.
Managing the Funds
Reinvesting any money earned via increased flow back into your business not going to be your first priority. Direct all the boosted profits strictly towards paying off the balance of the hard money loan. Failure to pay back the loan could result in losing your home. Once this loan is paid off, then you can safely redirect the accumulated profits back into the retail business.
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