Hard Money Commercial Lending Basics

What is a hard money commercial loan?

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

Hard Money Commercial Lending verses traditional lending

Traditional loans from banking institutions rely heavily on borrowers income, credit, tax returns, etc.. as opposed to a hard money commercial loan’s primary reliance on the hard real estate asset. Along with requiring substantially more documentation, conventional lenders have minimum credit scores (typically low 700 Fico and above) as opposed to hard money commercial 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 commercial financing 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 commercial loan appropriate?

There are numerous circumstances where a hard money commercial 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 Commercial Lending