What is a hard money loan?
A hard money loan is an asset-based loan. A borrower receives funds secured by a piece of real property.
Private investors or hard money companies issue hard money loans.
What Is a Commercial Hard Money Loan?
A hard money loan is a short-term, asset-based loan secured by real estate. Unlike traditional bank loans, hard money lenders focus on the property’s value rather than the borrower’s credit score. Real estate investors commonly use these loans for fix-and-flips, renovations, or bridge financing.
Key Features:
- Short-term (6–24 months)
- Higher interest rates (8–15%)
- Faster approval than traditional loans
What Are the Pros and Cons of Hard Money Loans?
| Pros ✅ | Cons ❌ |
|---|---|
| Fast funding (5–10 days) | Higher interest rates (8–15%) |
| Flexible credit requirements | Short repayment terms (6–24 months) |
| Great for distressed properties | Risk of foreclosure if the loan defaults |
Who Uses Hard Money Loans?
Hard money loans are popular among:
- Real estate investors (fix-and-flip, rental properties)
- Developers (land loans, construction financing)
- Borrowers with bad credit but strong collateral
How to Qualify for a Hard Money Loan?
Lenders look for:
- Substantial collateral (property value matters most)
- Exit strategy (plan to repay via sale or refinance)
- Down payment (varies by lender, typically 25–30%)
Tip: Some lenders require real estate investment experience.
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Related pages Commercial Hard Money Loans
- Do you qualify for a commercial hard money loan? 3 Business scenarios for business hard money loans.
