Hard money lender is fast access to the capital needed from private investors.
A hard money lender may be exactly what your business needs because you are consistently hearing no from the banks when you are attempting to obtain financing. A hard money lender is typically a private lender that will lend money to more high risk companies because they can charge a higher interest rate.
They also provide short term loans which are also referred to as bridge loans. The interest rates on these loans are typically between 11% and 16% for real estate hard money loans, which is much higher than the average bank. They give money on the following criteria:
• $50,000 to $20,000,000 per transaction on the same project
• Up to 75% LTV improved structures, up to 55% LTV raw land
• Commercial property purchase, construction, or refinancing
• Bank workouts, bankruptcies and foreclosures are common
• Loans on commercial buildings, vacant land, and more
With “private lenders” the hard assets are the key.
Hard money loans are property-driven and typically have a much quicker turnaround. Creative transactions such as: interest only payments, partial deed release, and participations are usually considered.
A hard money lender enables your business to get the financing it needs much faster than if you were waiting for a bank to close. Make sure though that you have a good business plan in place and an excellent strategy for how the funds will be paid back. Whether it is a hard money loan or a regular bank loan the lender wants to make sure the money will be paid back.