Hard Money Commercial Lending Basics

What is Hard Money?
The definition of “hard money” when referred to in real estate financing, is essentially a non-bankable loan. The name hard money is frequently interchanged with “no-doc” or private loans. For a hard money loan, the underwriting decisions are based on the borrower’s hard assets (real estate). Hard money loans typically close relatively quickly. Fairview Lending is the leader in hard money lending (NO-DOC / Private lending)


Hard Money verses traditional lending
Traditional loans from banking institutions rely heavily on borrowers income, credit, tax returns, etc.. as opposed to hard money’s primary reliance on the hard real estate asset. Along with requiring substantially more documentation, conventional lenders have minimum credit scores (typically mid 600 Fico and above) as opposed to hard money loans that are underwriting on the collateral as opposed to the borrowers credit (Fairview Lending has closed loans with FICO scores in the low 400s). Along with different underwriting standards, loans on conventional commercial loans can take months to close, hard money commercial loans close much quicker. The final important differentiator between hard money and conventional financing is the interest rate. Since there is more risk in a true collateral based loan, the interest rates are higher than a conventional mortgage.

When is a hard money loan appropriate?
There are numerous circumstances where a hard money loan is the best option for a client.
1. Borrowers with impaired credit (Fairview Lending can lend to borrowers with any credit)
2. Tax Liens/Judgements/unpaid utility bills, etc…:
3. Partner Buyout
4. Owner Occupied properties
5. Time constrained borrowers
6. Foreclosure avoidance
7. Foreign Nationals
8. Complex loans with multiple pieces of collateral

See the following resources related to Hard Money Lending

• Key tips prior to utilizing a hard money loan
• What is private/no-doc lending vs. hard money lending?
• How are Hard Money loans underwritten?
• What is Fairview Lending’s loan process?
• Can I broker a loan to Fairview Lending?
• I have never done a commercial loan, how do I switch from residential lending to commercial lending?
• Understanding the total cost of a loan Prepayment verse Interest Guarantee / Lockout / Defeasance