Free Hard Money Lender Business Plan
For Raising Capital from Investors, Banks, or Grant Companies!
Please note that the financials
in this complete free business plan are completely fictitious and may not
match the text of the business plan below. This free business plan demonstration
purposes only. If you are interested in purchasing the completed editable MS Word
and Excel documents for this business plan, please click the button below! Also,
the text of the business plan is formatted with a fully automated
table of contents.
It should be noted that there is no special software required to use these
templates. All business plans come in Microsoft Word and Microsoft Excel format.
Each business plan features:
- Excecutive Summary
- Company and Financing Summary
- Products and Services Overview
- Strategic Analysis with current research!
- Marketing Plan
- Personnel Plan
- 3 Year Advanced Financial Plan
- Expanded Financial Plan with Monthly Financials
- FREE 30 Page Sample Private Placement Memorandum
- FREE PowerPoint Presentation for Banks, Investors,
or Grant Companies!
- All plans are updated for 2013!
1.0 Executive Summary
The purpose of this business plan is to raise $5,000,000 for the development of a hard money lender while showcasing the expected financials and operations over the next three years. Hard Money Lender, Inc. (“the Company”) is a New York based corporation that will provide hard money loans (loans made based on the collateral of a property) to clients in its targeted market. The Company was founded in 2009 by John Doe.
1.1 Products and Services
As stated above, the Company will provide borrowers with an expansive level of hard money credit products. Through its lending operations, the Company can provide loans of up to 75% LTV (in select cases) via 1st and 2nd mortgages. Mr. Doe has developed an extensive credit protocol manual that will ensure that the business can provide investors with excellent returns without having to take an unusually large credit risk. The business, in the future, may also generate substantial fees from selling seasoned hard money loans to the secondary market. The Company intends to raise its capital from private investors that are seeking double digit returns on credit portfolios and debentures. The third section of the business plan will further describe the services offered by the Hard Money Lender.
1.2 The Financing
Mr. Doe is seeking to raise $5,000,000 from investors to launch the operations of the Hard Money Lender.
1.3 Mission Statement
Management is committed to providing both the client and investor with properly underwritten credit instruments that are beneficial to both parties while providing the Company will a continuous stream of income from servicing credit portfolios.
1.4 Mangement Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the lending industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target real estate investors and individual borrowers within the target market. In time, Hard Money Lender, Inc. will acquire secondary rounds of capital through limited partnership entities that will allow the Company to greatly expand its lending and portfolio servicing operations without diluting the value of shares held by Mr. Doe and investors.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Hard Money Lender, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Hard Money Lender requires $5,000,000 of investor funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is seeking to sell a 50% interest in the business in exchange for the capital sought in this business plan. The investor will receive a seat on the board of directors as well as a regular stream of dividends starting in the first year of operation.
2.4 Management Equity
John Doe owns 100% of the Hard Money Lender. This capital structure will change once the requisite capital has been raised.
2.5 Exit Strategy
The Management has planned for one possible exit strategy. The strategy would be to sell the Company to a larger entity at a significant premium. Since, the hard money lending and mortgage industry maintains a moderate risk profile once operations are established; the Management feels that the Company could be sold for six to eight times earnings. The exact value of the business will be highly dependent on the performance of the outstanding hard money loans held by the business.
3.0 Products and Services
Hard Money Lender, Inc. plans on offering a number of credit products to clients including residential loans and commercial loans. It should be noted that the funds and title to credit loans will be placed in a separate subsidiary company, which will prevent co-mingling of company and investor funds (once the Company raises secondary capital to further add to the Company’s portfolio of hard money loans). At the onset of operations, the Company intends to manage a $6 million dollar credit portfolio of hard money lending instruments. The Company will focus on providing credit for several types of transactions, which include property acquisitions, investment, refinancing, tenant improvements, construction, personal use, foreclosure bailout, debt consolidation, remodeling, bankruptcy, probate and 1st/2nd mortgages. The Company will also prepare the financing request package, facilitate and support the closing process, which includes researching public land records, checking real estate titles, filing notices with the proper authorities, reviewing contracts and escrow arrangements, ensuring proper identification for all borrowers, and disbursing the final funds to the borrower. At all times, the Company will remain in compliance with all federal and state laws regarding the documentation of hard money credit instruments
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the hard money lending industry, the customer profile, and the competition that the business will face as it progresses through its business operations. Currently, the economic market condition in the United States is in recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many economists expect that this recession will continue until mid-2009, at which point the economy will begin a prolonged recovery period. However, hard money lenders operate differently from their traditional mortgage financing company counterparts in that much more focus is given to the collateral of the property. Additionally, these loans often carry a much shorter term (typically 1 to 3 years), and the fees associated with these loans are much higher than traditional mortgages. With the mortgage industry ground to a halt, many real estate investors are turning to hard money lenders so that they can acquire heavily undervalued properties (especially among foreclosures).
4.2 Industry Analysis
The market for real estate loans is one of the largest economic markets in the world. In the United States, the market for mortgages (and hard money loan instruments) is the largest consumer and commercial finance market. For most people, a purchase of real estate (for both primary residence or investment purposes) is the largest financial transactions that they will ever conduct. Any standing structure has monetary value and can be used as an investment. Offices and homes are a necessity for all people and businesses. The overall market for real estate will continue to grow as the population continues to grow.With the continued downturn in the general mortgage market (especially the financially weakened sub-prime market, which has spread to all aspects of lending), Hard Money Lender, Inc. is an excellent position to assist customers with the high demand for specialty hard money loans offered to people that are in a difficult financing situation. This industry is expected to grow tremendously over the next five years as interest rates increase and the number of foreclosures increase. Currently, there are 15,110 companies that operate in a hard money lending capacity that is similar to that of the business.
4.3 Customer Profile
As discussed in the third section of the business plan, the Company intends to market to people that fall into the sub prime lending market or have credit needs that do not conform to traditional bank standards. Many people have severely overextended themselves over the last six years as interest rates have remained historically low while the general economy has grown at a faster than expected pace.
4.4 Competitive Analysis
As stated above, there are more than 15,000 companies operating within the United States that provide hard money lending facilities. Hard Money Lender, Inc. is seeking to create a competitive advantage over its competition by providing borrowers with a plethora of hard money credit facilities that will allow them to extract more capital from their properties. This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.
5.0 Marketing Plan
Hard Money Lender, Inc. intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Company.
5.1 Marketing Objectives
• Establish relationships with real estate brokers in the target market.
• Implement a local campaign with the Company’s targeted market via the use of flyers, local newspaper advertisements, and word of mouth advertising.
• Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
5.2 Marketing Strategies
Management intends to use a qualified advertising and marketing firm to help the Hard Money Lender reach its intended audience of homeowners and real estate investors. This campaign will include the use of traditional print and media advertising as well as the Internet. Direct advertising campaigns will be of significant importance to the Company as Hard Money Lender, Inc. is offering programs to a specified group of homeowners and real estate investors. Hard Money Lender, Inc. also intends to use a number of direct marketing strategies such as mass mails, cold calling, mail-box brochure distribution, Yellow Books listings, and other traditional advertising means to generate calling traffic to the Company’s office. These expenditures will total approximately fifty to sixty percent of the Company’s advertising campaigns. Finally, Mr. Doe intends to work closely with a number of local and state-wide real estate brokers that are seeking to place capital for their clients’ real estate acquisitions. As time progresses, this avenue of marketing will become an invaluable resource for new business for the Hard Money Lender, Inc.
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
6.3 Management Biographies
In this section of the business plan, you should write a two to four paragraph biography
about your work experience, your education, and your skill set. For each owner or
key employee, you should provide a brief biography in this section.
7.0 Financial Plan
7.1 Underlying Assumptions
• Hard Money Lender, Inc. will have an annual revenue growth rate of 16% per year.
• The Founder will acquire $5,000,000 of investor capital to launch the operations of the business.
• The average hard money loan will generate revenues equal to 4% of the face value of the loan and a 16% interest rate over a term of one to three years.
7.2 Sensitivity Analysis
The Company’s revenues are moderately sensitive to changes in the general economy. Hard money lenders operate in a capacity such that the people seeking this type of financing are in a difficult situation, and as such, the Company may actually have increases in its revenues as time progresses. However, surges in the real interest rate may cause the Company to have trouble underwriting hard money mortgages among qualified candidates.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statements
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 General Assumptions
7.9 Business Ratios
Expanded Profit and Loss Statements
Expanded Cash Flow Analysis