Hard Money Loan

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Hard money loans are business loans that are usually used for emergencies to save a potentially failing business or piece of real estate. Oddly enough most hard money loans require real-estate as collateral. The price of real estate that is being used for collateral is usually the project the hard money loan is for. Hard money loans are very similar to bridge loans in that they are to keep business moving forward for a short period of time. Hard money loans are not to be used for long term working capital.

Hard money loans are meant for short term uses to keep business moving along

Because hard money loans are determined by the real estate market and not the bank rate, the interest rate for hard money loans tends to be higher than conventional bank loans or lines of credit.

Banks and lending institutions are going to want to see a good business credit score, a well written business plan, and financial documents that can prove you are a low risk small business borrower. Be sure to fully understand the contract of the loan before you sign any documents. You even might want to take the contract to a lawyer just to make sure you know what you are getting yourself into.

If you have never applied for a hard money loan before, take a trip to the bank and ask them what their underwriting guidelines are for approval.

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