What is a Commercial Hard Money Loan?

There are many reasons why you would need a loan, however some loan requests don’t fit the traditional lending mold.  This is where hard money loans come into play.  A commercial hard money loan is an asset-based loan where the borrower receives funds that are secured by the value of a parcel of real estate.  These loans are normally issed by private investors and companies, and interest rates for hard money loans are typically higher than traditional residential and commercial loans as a result of the increased risk taken on by the lender.

Do I Qualify for a Commercial Hard Money Loan?

Many people ask the question if they qualify for a commercial hard money loan.  In reality, hard money lenders don’t care about your credit history, taxes or any other related financial information.  This is because the only concern they have is if your property meets the underwriting criteria.  Private investors lend their money based upon the notion that the real estate parcel in question has enough protective equity left after funding of the commercial loan in addition to reviewing information from the borrower.

Who Actually Funds These Things?

Hard money loans are typically funded by private investors and companies.  The source of the loan could vary from one individual investor to a group of investors.  Often these private groups rely on professional lending asset managers or hard money brokers to fund and manage loans for qualified borrowers.

Are Hard Money Lenders Out to Take My Property?

Absolutely not!  Most hard money lenders have no interest in taking your property.  They make their money by servicing your loan on behalf of their private investors.  If they were to take your property, the previous money that they were making servicing your loan stops.  So their incentive is to keep you in your property for the duration of the loan!