Las Vegas Review-Journal (Sunday)
Why Borrowers & Investors Choose Ignite
Most bankable borrowers will have multiple sources of financing/ capital at their disposal, including friends & family, banks, and alternative lending options like Ignite Funding. But if banks are known to have the most affordable capital out there, why would borrowers need so many financing options? Below are a few of the main reasons why borrowers come to Ignite Funding to fund their projects:
■ The Borrower or Project Doesn’t “Fit Inside the Box”
Banks and friends & family set very specific parameters to be a viable candidate for financing. These parameters often create roadblocks for borrowers in many ways, but here are a few of the most common: 1) the borrower out-grows their regional bank and/or maxes out their friends & family available capital, but is too small to qualify for national bank financing; 2) The borrower encounters unique project opportunities but the assets do not meet bank or friend & family standards; or 3) the borrower is looking to evolve with the changing market, but the product or projects do not meet bank or friend & family standards.
At Ignite Funding, we think like a borrower, which is why we are an asset-based lender. This enables us to think outside the box and bridge this gap in financing left by banks and friends & family financing.
■ Predictable Closing Times
Banks are notoriously slow in their due diligence to decide whether they will fund a project, making them unpredictable and inevitably unreliable. At Ignite Funding, since we are an assetbased lender, our due diligence period is shorter. Therefore, we can inform the borrower if we will pass or we will fund the project in a matter of weeks. This can be detrimental to a developer who is in the process of acquiring a piece of property with a hard close date, giving them the ability to search more quickly for other sources of financing if needed.
■ Bridge Financing
In order to lock-in long-term cashflows and ensure their ability to recoup the costs of underwriting the loan, the banks implement prepayment penalties. For many real estate projects, the borrower is typically acquiring and/or adding value to the property with the intent to sell or refinance in a shorter amount of time than is needed with a long-term bank loan. Ignite Funding does not implement a prepayment penalty, allowing borrowers to be more versatile and move-on to new projects more quickly. This can translate into greater returns for the borrower by completing more short-term projects and contribute to their overall success in the long run.
The below chart illustrates an example of the borrower’s costs associated with bank vs. alternative financing on a short-term project. As you can see, the costs are comparable. In turn, investors benefit from Ignite Funding’s ability to lend to bankable borrowers on short-term Trust Deed investments that are collateralized by a thoroughly underwritten property, and yield double-digit annualized returns paid through to investors as monthly fixed-income.