When getting started with hard money, it is important to understand each little detail, especially when you’re signing your name on any document. As a part of the hard money loan application process, each borrower is required to fill out an application, which includes a personal financial statement, credit and background waiver, and a deal summary.
On the application, signatures and social security numbers are required from each member of the LLC or participating party on the project. Each member is signing as a personal guarantor on the hard money loan.
While hard money loans are only issued to corporations, a personal guarantee is required to ensure the loan. This guarantee is promising that the monthly interest payments will be made and the hard money loan will be paid in full.
If you are a member of the LLC, you must be a guarantor on the loan. In the event that you own less than 10% of the LLC in aggregate, you are not required to personally guarantee the loan, however you are required to be at the closing table as well as sign a pledge of membership interest.
In order to be qualified as a guarantor, it is necessary that our underwriting team processes a credit pull, background check, and personal financial statement for each member. This is all included on the full application and must be completed in entirety for each partner on the loan.
Every guarantor must also be present at closing to sign in person. We can not accept a power of attorney for closings.
It’s also important to note that while we encourage you to have all the helping hands you need to complete your renovation project, our underwriters can only take into consideration those guarantors on the loan when it comes to the approval process.
We look forward to working with you on your real estate investment project!