Texas Hard Money Loans 2021
Texas hard money loans in 2021 can serve property investors well. In fact, these debt instruments are generally specifically designed to work with commercial property investors and even residential real estate property investors. What’s more, hard money loans in Texas are readily available through a number of sources. Better still, they can even be customized to some degree in order to fit the borrower’s set of circumstances. Read on to learn more about Texas hard money loans and what you need to know.
Texas hard money loans in 2021 will likely enjoy some competitive interest rates, courtesy of the interest rate market. Though most hard money loans do carry a slightly higher interest rate, they are much more flexible and applicable to commercial and residential real estate property investment ventures. For example, short terms can range from just half a year to two years or a bit longer.
What are Hard Money Loans?
Texas hard money loans — like those in other states — serve as an alternative to traditional commercial financing. These can be found in some banks, through private lending networks, and even through private investors. In most cases, hard money loans are made available by a group of investors who pool their money together to lend for a variety of reasons.
How Exactly Do Hard Money Loans Work Anyway?
Hard money loans, which are sometimes called bridging loans, flip loans, or asset-backed loans are an alternative type of financing that are typically used to buy and remodel or rehabilitate commercial and/or residential properties. Hard money loans also differ from traditional financing in their term length. Instead of being 5 to 7 to 10 years, hard money loans generally last between 6 months, to a year, up to 18 months, and two years or more.
Also, hard money loans offer more flexibility, meaning there are factors of the conditions, and terms can be customized to better fit the borrower’s needs. Furthermore, hard money loans offer quick funding. Rather than taking weeks upon weeks or months on end, hard money loan funding can be made available in just a week, sometimes days. That means getting the money very fast, which is often a need for property investors.
As you can clearly see, hard money loans in Texas and beyond are a great alternative to traditional bank loans and have more options for purpose-specific financing.
Texas SBA Loans
Texas SBA loans or Small Business Administration loans are commercial debt instruments tailored to start-up companies, newly established businesses, and even for established organizations. Plus, there are also SBA loans that offer capital to rebuild businesses, more particularly for rebuilding or rehabilitating commercial real estate or even expanding businesses, as well as rescue funds for struggling companies. So, take a moment to read on to learn more about Texas SBA loans.
Texas SBA Loan Requirements
Texas SBA loans are not just for “small” businesses (at least in the sense most people would think). For instance, SBA eligibility requirements state that any applicant business must employ less than 500 hundred people, and earn less than $7.5 million, on average, for the past three years of operation. Moreover, the owner’s net income must be less than $5 million and have a tangible net worth of under $15 million (after taxes and not counting carry-over losses).
What are SBA Loans?
Contrary to their name, SBA loans, are not provided or funded by the United States government. Rather, these loans are facilitated through various commercial lenders, including national chains and specialty lenders. The government only provides the guidelines asked to The Lending requirements, including things like loan term, interest rates, down payment requirements, collateral, and other factors. So, SBA loans are offered by banks, credit unions, and other lenders who participate in the government’s program.
Types of Texas SBA Loans
There are actually a number of SBA loans. But, there are four principal loan programs, which include the 7(a) loan program, the 504 loan program, a microloan program, and SBA disaster loans. Each has its own set of rules and requirements and some overlap as to purpose.
- 7(a) loan program. These loans are backed by the government for up to as much as $5 million. Funds are eligible for use for working capital, buying equipment, or expansion.
- 504 loan program. Like the one above, this SBA loan is also guaranteed by the government for up to $5 million. Applicant businesses may use the funds for buying unimproved properties or vacant land, purchase machinery, or acquiring facilities.
- Microloans. Generally. SBA microloans offer up to $50,000 in capital for the buying of inventory, commercial equipment, working capital, and start-up money.
- SBA disaster loans. As the name states, these loans are for companies impacted by natural disasters. SBA disaster loans go up to $2 million.
Texas Construction Loan Forecast 2021
The Texas construction loan forecast for 2021 Is a bit uncertain, at least in the near term, due to volatility in several key areas. For instance, the cost of lumber is rising steeply, but this phenomenon certainly won’t last forever. Yet another disruption is the changing labor market, amidst a reopening of the state after it’s shut down from last year. However, the Texas construction loan market should stabilize within the next few months and will perhaps close out the year on a very strong performance. Read on to learn more about the Texas construction loan forecast for 2021.
The Texas construction loan forecast in 2021 so far has seen its shares of ups and downs, though the residential resale real estate market has been much more stable by comparison. This is due to the exodus from California and other states in the northwest, where residents are relocating to the Lone Star State, as well as some states to the southwest, and even down to the southeast.
The construction loan industry in Texas, and as well as other states, is currently experiencing radical changes, due to rising lumber prices. This has been caused by the global pandemic shutdown, which occurred approximately a year ago. Since many lumber Mills ceased their normal operations, the price of this very key building material has gone up substantially over the past few months, and that trend is expected to continue into the next few months until the lumber harvesting and production industries stabilize. In fact, it is now becoming commonplace for builders to include stipulations in their construction contracts with their clients that allow for a significant increase in the overall price, due to the increasing cost of lumber.
Meanwhile, the Texas construction loan industry is also dealing with the slow but steady onset of inflation. When the cost of basic goods and services rises, that puts undue pressure on other industries, including mortgages and construction loans, otherwise known as bridge loans. A rise in the day-to-day cost of living will cause people to shy away from new construction in favor of resale, particularly in an environment where the costs keep rising.
Although, a huge benefit to the Texas construction loan industry is the incredibly low-interest rates. Near historically low-interest rates have helped propel the mortgage and new construction loan industries up to new heights, due to the fact that people can borrow for so little. This has also greatly helped the refinancing Market, as homeowners are able to lock in lower rates and enjoy lower monthly payments.
The next few months will be critical to determining the overall performance of the construction loan industry in Texas for the rest of the year.
Texas Rehab Loans
Texas rehab loans offer a way to renovate a residential property to make it into a primary residence, rental house, or to improve a residence with a permanent addition. Generally speaking, there are three major types of renovation loans, all of which are backed by the federal government. However, each has its own purpose, rules, and restrictions, so it’s best to understand which is right for the project you have in mind. Read on to learn more about Texas rehab loans and what you need to know.
Texas rehab loans allow individuals to make certain improvements to the residential property without having to fund the entire project with cash upfront. The three major rehab loans are the FHA 203k loan, the Fannie Mae HomeStyle loan, and the Freddie Mac CHOICE Renovation loan. As previously mentioned, each of these serves a fairly unique purpose meaning that they are tailored for fairly specific situations.
(Please keep in mind that although these are the three major federally backed Home improvement loans, there are many more types available. For example, local and regional banks and credit unions, as well as private lenders, may offer their own form of rehabilitation loans which might better fit your circumstances.)
- FHA 203k loan. This loan is for primary residences only and therefore, cannot be used to fix and flip in order to sell or rent. Currently, it requires a minimum credit score of 500, with 10% down, or a credit score of 580, with 3.5% down. Additionally, this loan requires the borrower to start renovations immediately after closing, which cannot include any items the program deems as a luxury. For instance, it might allow the transformation of a small bedroom into a master suite, but will not allow the installation of a swimming pool.
- Fannie Mae HomeStyle loan. This loan program is for a primary residence, second home, or even an investment property. It requires a minimum credit score of 620 at this time, with a minimum down payment ranging from 3% to 5%, depending on the applicant’s creditworthiness. Like the FHA 203k loan, this program allows for fairly standard renovations, but luxury items are still not permissible.
- Freddie Mac CHOICE Renovation loan. This loan program is best suited for homeowners living in outdated properties who want to make some strategic improvements. But, it is best suited for first-time homebuyers who find properties that need some updating. With this type of loan, first-time homebuyers can finance the necessary improvements right along with their mortgage and an all-in-one package.
San Antonio SBA Loans 2021
San Antonio SBA loans for 2021 offer several ways to fund commercial ventures, including start-ups, along with operating expenses, and even for replacing physical items after suffering from a natural disaster. Plus, for other costs, such as purchasing inventory and/or equipment. So, read on to learn more about San Antonio SBA loans this year and some basic necessities to know.
San Antonio SBA loans in 2021 range in both purpose, amount, and also in down payment, as well as interest rate, term, and more. In fact, there are a number of SBA loans that are intended for different sets of circumstances. But, before getting into the nuts and bolts of these commercial loans, it’s important to understand how they work.
SBA Loan Basics
The United States Small Business Administration is a department of the federal government that obviously deals with commercial practices and more across the country. It is also a guarantor of business loans. However, the federal government or Small Business Administration does not actually lend money to people or enterprise operations. Instead, the SBA defines the roles of commercial loans, which is to say the rules and regulations of how these debt instruments work. SBA loans are actually made available through banks, credit unions, as well as other lenders.
Types of SBA Loans in San Antonio
There are four main types of small business loans. Each differs in length of term, interest rate, down payment requirements, and other elements. Here is how SBA loans basically breakdown by type and what they are for:
- SBA microloans. Applicants of the SBA microloan can borrow up to $50,000. Funds must be used for specific purposes, which include, but are not limited to buying inventory, purchasing commercial equipment, funding working capital, as well as start-up funds.
- SBA 7a loans. Applicants of the 7a loan can expect to borrow as much as $5 million. However, this loan is not for start-up ventures. Rather, for established businesses needing capital for expansion purposes, purchasing commercial equipment, along with working capital.
- SBA 504 loans. Applicants of the SBA 504 loan may also borrow as much as $5 million. Funds must be used to acquire business machinery, buying facility space, or purchasing vacant land or unimproved commercial property.
- SBA disaster loans. This loan is fairly self-explanatory. Applicants can borrow up to $2 million and the funds must be used for recovery costs brought on by a natural disaster.