Traversing the Commercial Hard Money Loan Path

The type of commercial hard money lenders that have elevated the meaning of private money has grown in influence as a result of their growth over the past period. Borrowers now need a good broker who will guide them through the lending process.

last updated Sunday, July 13, 2025
#Commercial Hard Money Loan #Private Money Loan

by John Burson

Traversing the Commercial Hard Money Loan Path

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Private Money Loan

This type of loan is obtained through a non-bank institution, another financial company, or a private money lender. Several loans from conventional sources may be considered private money; however, various types of funding fall under the Category of Private money.

Different countersigning

Every lending platform has its distinctions in addition to the general types of loans. These differences are driven by some factors that may impact the countersigning limits and the loan process.

Liquidity and issues of focus

Commercial hard money lenders have a fixed amount of capital and are responsible for managing cash, as they don’t duplicate funds like the government. Private money lenders that hold commercial hard money loans on their balance sheets may need to exclude issues of concentration, which could be related to a specific borrower or type of property, to achieve more significant expansion.

Flexible versus non-flexible capital

Flexible or discretionary lending is a loaning policy where the lender can approve or decline a loan, even if investors are involved. On the other hand, non-discretionary capital requires the lender to obtain further financing approvals.

Balance-sheet versus non-balance-sheet lending

Stock or balance-sheet lending is a platform whereby the lender holds the loan in its collection or portfolio. Non-balance-sheet lending occurs when a loan is retained by a party other than the lender in the long run.

Different combination

In most cases, private money lenders are also branded as commercial hard money lenders. Moreover, commercial hard money lenders believe that no countersigning, scrutiny, or due diligence should be required for commercial hard money loans. However, some private money lenders, such as peer-to-peer and crowdfunding platforms, adopt a more lenient countersigning standard, shifting the bulk of credit risks to others in a highly competitive environment.

When you are at work and building a relationship with a lender, it is always advisable to ask whether they have discretionary funds or whether other approvals will be required to avoid any surprises during the countersigning process.