Commercial Hard Money Lenders: Bridging a Financial Gap

Commercial Hard Money Lenders: Bridging a Financial Gap

Commercial hard money lenders can bridge a financial gap for businesses or individuals owning a commercial property in a number of ways. If a commercial property owner needs to improve a structure or enhance the elements of a business prior to a sale or to achieve new goals, commercial hard money lenders can help. If a company is losing money, or if the owner’s credit is bad, a conventional commercial loan may be out of reach. But a hard money lender can make a loan even when a bank cannot.

In fact, hard money lenders provide the riskier loan support that banks simply will not touch. While hard money lenders commercial loans are more expensive than bank loans, the assistance such loans provide can be invaluable to the business owner.

Why Hard Money Lenders Step In

Hard money lenders commercial loans are available because the lender looks first and foremost at the commercial property as a source of repayment if a borrower cannot meet his payments. Credit history and the company’s business income are not scrutinized as thoroughly. A typical hard money loan is for a short term period. A twelve month loan is common.

What to Look for in a Hard Money Loan

Commercial hard money lenders can vary as to the amount of exit fees and/or prepayment penalties their loans can contain. These are areas for borrowers to note prior to choosing a lender. Borrowers should also research any late fees on a loan’s balloon payment after loan maturity has been reached. Many lenders are able to work with a borrower if he or she is still in the process of applying for a permanent or more conventional loan to take on after the hard money loan lending period.

Bridge Loans and ValueAdded Deals

Many commercial hard money lenders use speed of funding to create viability. Short term fast financing like this is called a bridge loan, and can support emergency commercial needs quickly.

Value added deals also benefit from this type of bridge loan, allowing upgrading of commercial properties through the loan, followed by either refinancing or reselling the property to pay off the loan and reap the profit of the improvements.

Where the Money Comes From

Commercial hard money lenders are able to provide funds through a group of private investors culled for individual or group deals; or through large mortgage funds which are similar in type to mutual funds. The latter resource type is usually already in place, and can be leant faster than if the lender must secure the resources.

Whatever source the hard money lender uses, commercial lending of this type can greatly assist business or commercial property owners with improvements, temporary financial short falls, or preparing a property or business for sale.