SCC is a value-based lender.
What is a value-based loan?
In real estate financing, a value-based loan is a non-bankable loan on an investment property, single-family home, commercial or multifamily building. In some circles, the term “hard money” is used to describe these types of loans. Hard money loans are often associated with “no-doc”, private loans, and bridge loans. At SCC, we believe the term hard money is not a fair representation for this type of lending. In our opinion, the concept of hard money gives the wrong impression when used in lending circles.
We prefer to use the term value based lending. In our value-based lending model, underwriting decisions are based on the value of the borrower’s hard assets—the commercial or investment real estate used as collateral for the transaction. Our value based loans are processed and closed quickly.
How is a value-based loan different from a traditional loan?
A value-based loan is an excellent tool for the right borrower in the right situation. In some cases, it is the only viable financing option. Traditional loans offered by banks, credit unions, and mortgage companies have complex underwriting standards with little or no flexibility to deviate from the guidelines.
With a traditional lender, your credit score, income, and earning ability are heavily weighted. SCC does not employ complex underwriting standards. Simply stated, as a private lender we have the ability to approve loans that are unique and that do not conform to traditional underwriting guidelines.
The traditional lender requires substantially more documentation to provide them comfort in the loan they are about to make to you. SCC requires minimal funding documentation. As a value-based private lender, we will not judge your request solely on your credit score or income information.
Borrower “skin in the game”
Unlike traditional lenders, SCC does not focus on the strength of your income, credit, or tax returns to approve a loan. Instead, confidence in your loan is based on the value of the real estate used as collateral. We refer to this as borrower “skin in the game.”
Conventional loans can take months to close and often fail in the eleventh hour.
Our loan process is much quicker. We provide you with a funding estimate and preliminary approval within a day or two.
Since we rely on the real estate collateral provided in the deal, and do not look into credit or earnings history, there is more risk to us.
Many borrowers take advantage of our fast underwriting and quick closings to negotiate more favorable terms from the seller due to quick closings.
SCC is an appropriate source of funds in many circumstances:
- Borrowers with impaired credit including past bankruptcies
- Tax liens/judgments
- Urgent cash needs or significant repairs to real estate
- Selling a current property and buying another at the same time
- Time-constrained borrowers who need a quick closing
- Borrowers in need of a stated loan due to tax returns (or lack thereof)
- Foreclosure avoidance
- Borrowers who do not have the time or energy for the demands of a conventional lender
- Complex loans with multiple pieces of collateral