What is Commercial Hard Money Lending?

With a commercial hard money loan, underwriting decisions are based on the borrower’s real estate assets. Such loans are also called “no-doc loans”, “private hard money loans”, etc. For a commercial hard money loan, the lending decision is based on the “commercial asset” as opposed to relying heavily on a borrowers’ credit, financials, etc.
By relying on an asset, private lenders are able to fund transactions that might not fit traditional lending guidelines. Private Lending Group is a unique lender in the hard money space. We are a direct lender and lend our own funds; our money lenders underwrite in-house without any upfront fee. This allows Private Lending Group to provide honest answers quickly without the thousands in out-of-pocket expenses typically required for a commercial real estate loan (appraisals, etc.).
How is Commercial Hard Money Different from a Bank Loan?
The following table summarizes the key differences in loan characteristics between a conventional bank loan and a commercial hard money loan from Private Lending Group.
Bank |
Private Lending Group Commercial Lending | |
Basis for Loan Approval | Income, credit score, tax returns, financials | Real estate assets |
Minimum FICO Scores | Typically 700+ | 580 (or case by case) |
Required Documentation | Significant | Minimal on the property |
Upfront Fees | Inspections, appraisals, application, etc… | No upfront fees |
Loan Committee | Required | None We make the decisions directly |
Loan Money Received | 2-3 months | Less than 10-14 days |
A commercial hard money loan is a good alternative to traditional bank financing. This alternative financing can be very beneficial to the borrower in many circumstances. Below are just a few of the reasons for when a commercial hard money loan might be appropriate.
When is a Commercial Hard Money loan appropriate?
- You need a loan quickly and can’t wait the 3 to 6 months for a traditional bank loan
- You do not qualify for traditional financing for whatever reason (income, tax returns, unique property, etc.)
- Transaction falls out of traditional lending parameters
- Your credit is impaired
- Although you have ample equity, you or your property have liens, judgments, unpaid bills, etc. that requires cash to resolve
- You have ample equity in your property and need cash fast
- You need business working capital
- Your property is occupied by your business and your financials don’t tell the full story
- You need a loan without all the documentation requirements of a bank
- You are trying to avoid foreclosure and restructure your debt
- You are a foreign national
- You need a complex loan with multiple pieces of collateral
- You need a creative solution to a loan that doesn’t fit other lenders
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