Hard Money Question

[Stevens Demorcy]

So I was speaking to a provider about SBA loan options for a small business i am starting. Its not real estate. He suggested I look at a hard money loan from a provider that he just started working with and the deal sounded almost too good to be true, but he sent over some paper work and its all in the contracts. But I am a bit concerned about the fee being paid to him which I think is high, but he says those numbers are non negotiable.

Servicing - 1mil for 5years

Broker gets -10% - 100,000

Referring party - 2pt -20k

Bank - 1% upfront to start the loan servicing.

The reason I am looking at this option is that it allows for interest only payments of 1% to be paid annually instead of a monthly payment.

Looking for some opinions on this deal, is the broker fee too high? Did anyone hear of these types of deals before?

[Jason Hirko]

Originally posted by @Stevens Demorcy:

Since I dont need all the money for the small business, the plan was to then use the excess for real estate flips, to help recoup that pay back money.  Thoughts?

 Depending on the business you are looking to start, it sounds like you are supplementing a risky business with a very risky business. And if the business is worth starting in the first place, shouldn't you not be distracted by flipping houses?

To clarify, the SBA broker is charging you 10 points? That sounds excessive.