The important role of private lenders in the current economic situation
 
At this time of writing, the redemption of high-risk and collectable loans by financial institutions have found their place. Funds for business owners should now become available, and positive economic development should follow.
 
Unfortunately, the reality is different. Pressured by politics, large financial institutions have increased their bureaucratic procedures in the issuance of loans. Consequently, business owners, traditionally the principle generators of the economy, are having increasing difficulty in procuring loans. This is one of the reasons the current economy is at a stand still.
 
This is where BridgeFinance Costa Rica sees an important role for private lenders, stimulating the economy.
 
In the view of BridegeFinance Costa Rica, the economy will be fueled by lenders ready to lend money against sufficient collateral (real estate). Private equity short-term loans will bridge the funding gap of business owners.
 
These loans are known as Hard Money Loans. The loan process is referred to as Bridge Financing. Loans with a relatively high interest rate. BridgeFinance Costa Rica sees that these loans are advantageous to both borrowers and lenders. The relatively high interest rate makes the loans more attractive to the lenders, and the borrowers are able to obtain fast relief for short-term funding.
 
BridgeFinance Costa Rica believes that there are two important reasons for borrowers to seek these Hard Money Loans.
 
First, most investors seeking funding, purchased real estate when prices were relatively low. Securing a Hard Money Loan allows them in most cases to recoup their original investment.
 
Second, Hard Money Loans allow borrowers to continue realestate development as planned. The costs of these loans are relatively low compared to the profit the development generates.
 
 

Examples from our daily practice
 
Example 1: A developer of a bungalowpark is about to finish his project. To complete the construction, marketing, and sales of this project the developer needs $200,000. Without these funds, the developer faces a fire-sale of his project. After a complete finishing, the project will sell for a minimum of $2 million. The developer is full owner of the project.
 
Example 2: A hotel owner was told by his most important client, a tour operator, that he would no longer book tours at the hotel, if it is was not renovated. The hotel received $56,000 from the tour operator's previous year's bookings. Renovation costs are budgeted at $80,000. The hotel owner did not have the necessary cash, nor cold he secure external capital. The hotel is free of debt.
 
 
Offering financial assistance
 
BridgeFinance Costa Rica exists to meet the financial needs of borrowers, such as those mentioned in the two examples above. Our mission is to offer financial assistance to business owners who can offer their realestate assets as collateral. We facilitate short-term loans for these business owners by matching borrower and lender, carefully and safely. In case of loans with higher volumes a pool of lenders can be used.
 
In its facilitation of these loans, BridgeFinance Costa Rica offers the average lender 18% in annual interest profits, with a maximum Loan to Value (LTV) of 30%. Funds are available to the borrower in 24 days.