Traditional finance uses a lot of policies to make sure that people don’t get into trouble with their loans. These policies help lenders figure out how much money someone can borrow, how likely they are to pay back the loan, and other things like that.
However, with some types of finance, you may not need all the rules and policies. For example, if there is a sunset clause for the loan, and there is a clear plan for how the loan will be paid back, then this is called an exit strategy.
The stronger the exit strategy, the less risky it is for the borrower. There are a few examples of strong exit strategies.
- When you sell your property, the loan will be repaid.
- When you sell stock or goods, the loan will be repaid.
- You may receive a large payment in the future from many different sources like an insurance payout, sale of a business, or banking funds.
- Money from a deceased estate can help repay the loan.
Every loan has a plan for when you will pay it back. But if you are looking for short-term money to help you, your exit strategy is really important when the lender is deciding if they should give you the money.
Your exit strategy is also your profit strategy: how you will get the most money possible out of any opportunity.
The moral of this blog? When applying for any loan you should make sure you have a clear exit strategy in mind before you start the finance process – and a lender that will back your strategy and set you up for success.
Speak with one our expert team at Equity Tap to explore your finance options all with strong, clear and secure exit strategies.
Schedule a call with the Equity Tap Team or Apply Now.