Introduction to Hard Money Loans in Ohio

These case studies for hard money are from Akron and Columbus Ohio. First I want to provide a brief description of what a hard money loan is. When a borrower cannot get approved for a standard bank loan or conventional lending institution, they have to borrow from the private sector at much higher interest rates. The lender is in a 1st lien position in case the borrower defaults, and they get their money out first on the quick sale of the property. In some cases the private money is pooled from investors who hire a brokerage firm to give high interest mortgages to borrowers who have been spurned by the banks.

The interest rates on hard money loans can swing anywhere from 12% to 20% depending the evaluated risk taken by the lender. The default rate (when the borrow falls behind in their payments) will go as high as he current lending laws permit. These default rates are as much as credit card interest rates.

Case Study #1 for a Hard Money Loan In Columbus Ohio

Our first case study takes place in Columbus Ohio and it’s the story of Carl Wilson, who owns a small aircraft maintenance shop. He has a staff of 4 in his small business, and was growing fast. He had landed a contract to overhaul and repair 12 large aircraft. He needed to expand his work area and hire more staff, and this meant he needed an infusion of cash. He owned the hanger he was operating from and the total property value was $1,300,000. He had an appraisal carried out so he could use his property as leverage when he went to the bank for funding.

Unfortunately, Carl had already taken out an equity line of credit on his property for $400,000, and had a bad credit rating from a dissolved marriage, and bad choices. The banks would not even consider giving him bridge financing of any kind so he could buy another property, tool up, and hire more employees. If he wanted to grow his business and comply with his contract(s) it was imperative that he got a loan. His contracts would be paid out within a year of signing with the small airline, so the funds he needed were only short term. He started by scouring the private lending sector for funding…..to be continued.

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