If you’ve ever tried to apply for a bank loan as a self-employed independent contractor, you know how hard it can be. Asset-based loans are a great alternative.
It’s the dream of many people to own their own business and work for themselves. And you’ve done it — you get to work where your passion lies, make your own schedule, work from home and take time off when needed. You can also use a lot of nifty tax deductions.
However, these many perks come with a few downsides. One of them is applying for a loan. The banks want you to prove a steady income, low debt ratios and tax returns that look like everyone else’s. For a self-employed individual, that’s not easy. Income doesn’t always come at regular intervals and 1040s can show a bad year when you’ve actually had a good year. Factor in some of the debt you might take in over the course of a year (like an equipment purchase) and the banks will be left scratching their heads.
Luckily, you’ve got other options outside the banks and big financial institutions.
Asset-based loans, or hard money loans, as they’re sometimes called, can be an ideal option for self-employed people. These loans are funded with private money from investors, which gives them a range of benefits.
The biggest benefit is that they’re secured by an asset. This is typically a property but can be almost anything of real value. Because the lender has that extra layer of insurance, they’re not quite as concerned with having you prove your income, demonstrate low debt or show off a blemish-free financial record and a traditional tax return. In fact, these types of loans are relatively easy to qualify for.
Another advantage is that they’re quick. Whereas bank loans can take over a month to come through, private money loans can be approved in days and funded in a week or so. This is a major upside, especially if you’re trying to act quickly to secure a good deal in an investment property.
If you’re sick of the mountains of paperwork and hoops to jump through at the bank, you might consider an asset-based loan in Arizona. It doesn’t matter if you’re self-employed
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.