Just because you found a great investment opportunity doesn’t mean you’ll be able to get a bank loan to make it happen. Traditional banks are limited in the types of loans they can offer, and both the properties and individuals themselves have to meet certain criteria in order to qualify. If you’re in a situation where a traditional bank loan isn’t possible, alternative lending could be the answer. 

If any of these five scenarios are familiar to you, consider all of your lending options before giving up.

1. Bad Credit

Your credit history is a major factor in determining whether banks will loan to you. If you have missed or been late with payments in the past, it can affect your credit rating. Unfortunately, it can take a while to rebuild your credit, so even if you’re in a good position now, you still might not qualify for a bank loan. Alternative lending is typically based on equity, not on credit history, so even if a traditional lender turns you down because of bad credit, if you’re a property owner, you might have another option. 

2. Vacant Commercial Properties

Commercial real estate loans require the property to be bankable, meaning that there are existing tenants who can generate revenue. Even with a viable property, potential tenants, and a solid business plan, you might not be able to get a bank loan if the property is currently vacant. If you have a vision for a vacant property, alternative lending can help you realize the dream. In addition to covering the purchase price, you might also be able to secure funding to cover some of the costs to make improvements to the property.

3. Cannabis Loans

Cannabis isn’t legal at the federal level, which means banks can’t participate in lending for these types of businesses, even when they are legal at the state and local levels. If you want to purchase property to rent to a cannabis business or if you have your own cannabis business, alternative lending can help. Hard-money lenders aren’t subject to the same requirements as traditional banks, so if you have equity, you may be able to get in on the cannabis boom.

4. Fix-and-Flip Loans

In addition to individual financial requirements, banks also look at the properties you are considering buying, and those properties have to meet certain criteria. Unfortunately for real estate investors, the properties that are ripe for fix-and-flip opportunities don’t always qualify. Alternative lending solutions provide money for both the purchase and the majority of the rehab expenses, so you can leverage your equity to jump on a fix-and-flip property with the potential for a high return on your investment.

5. Speed to Close

No matter what type of loan you need, the reality is that traditional lenders move slowly, often taking more than a month to complete the entire process. This might be fine in some cases, but if you have a balloon payment coming due or need quick cash to keep your business afloat, a bank loan probably won’t meet your needs. Perhaps you have already lost valuable time trying to get a bank loan, and now that you’ve been turned down, time is of the essence. Alternative lending can get you cash in a matter of days, not weeks.


Alternative Lending Through Socotra Capital 

Socotra Capital is a hard-money lender that is not subject to the same requirements as traditional banks, which means we can offer lending solutions to cannabis businesses, borrowers with bad credit, investors looking at vacant properties, and those looking at fix-and-flip opportunities that need some work. If time is tight, we have a Lightning Loan program that can accommodate your needs. Want to learn more? Check out our free Borrower’s Guide today.

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