What is hard money?
Hard money is basically a term which is used to describe a short-term corporate loan taken from a private lender or company rather than the bank. They are called commercial hard money lenders. They give out funds on commercial property. The individual acquiring the loan is someone who doesn’t usually fit the credibility criteria required for traditional bank loans. However, they do have assets which may be used as collateral by the loan lenders.
This is seen as a good substitute or alternative to the loans that are normally taken from banks. This option works best when an individual needs quick financial help on a short-term basis. The terms and conditions for these loans usually go up to 12 months to maximum 5 years.
Hard Money Lenders VS Traditional Financial Institutions
Unlike the conventional funding from banks, hard money lenders have more to do with the property being used as collateral. Banks, on the other hand, are more concerned with borrower’s credit score and ability to repay the loan.
Hard money loans can be generated more quickly within a span of few days whereas it might take a full month when dealing with a bank.
Why Opt for Hard Money Loans?
While obtaining funds from a bank may seem like the perfect idea, borrowing from commercial money lenders may altogether be a better option due to multiple reasons. Some of the key reasons are:
Since commercial hard money lenders are more interested in the collateral, less time is spent on going through the financial history and records of the borrower. This means that the loans will come through quicker than usual. Hence, approval of loans is faster, sometimes even within 24 hours.
Flexible in Nature
There are no strict rules in the case of hard money lending and borrowing. These lenders do not follow a predetermined or fixed set of procedures like a traditional financial institutional would do. The loans are not subject to rules and regulations, making it easier and convenient for you to attain them.
More Options for Collateral Assets
Hard money lenders are flexible when it comes to accepting assets to be kept as collateral from the borrowers. They are willing to keep different kinds of properties to secure the loan as long as the potential return on those assets is noteworthy. In a few cases, some of them might even readily accept the future returns on the property involved than keeping a collateral asset.
Availability of Commercial Hard Money
Private money lenders can prove to be more easily accessible than banks. They are readily available almost everywhere and can work real fast for people who seek financial assistance. They will also make the whole process of borrowing and lending less painful for you than a traditional method would do.
If you are a borrower seeking quick financial help on a short-term basis to acquire commercial property, hard money loan is the answer.
How to Find a Reliable Hard Money Lender?