A hard money loan is a specific type of asset-based loan financing in which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property a investment property that may be in transition and does not yet qualify for traditional financing, where as hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such a arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.

Many hard money loans are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 65%-70%. That is, if the property is worth $100,000, the lender would advance $65,000 -70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

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A big part of our business is providing the “Hard Money” or “Bridge” loan option. This is not the perfect product for every scenario, but it is a quick and effective way to fund a deal. Our Funding Partners have access to a large portfolio of private investors that want to diversify their money in this fashion. We feel that hard money loans are an important alternative for many who own, buy, and invest in property and real estate projects. If you feel that this product may be a good fit for you, please fill out our online application and we will contact you to discuss.