What is Commercial Hard Money Lending?
With a commercial hard money loan, underwriting decisions are based on the borrower’s “hard assets” (real estate assets). Such loans are also called “no-doc loans”, “private hard money loans”, “bridge 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. Fairview is a unique lender in the hard money space. We our a direct lender and lend our own funds; we underwrite in house without any upfront fees for due diligence, etc… This allows Fairview to provide honest answers quickly without the thousands in out of pocket expenses typically required for a commercial 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 hard money loan from Fairview Commercial Lending.
|Bank||Fairview Commercial Lending|
|Basis for loan approval||Income, credit score, tax returns, financials||Real estate assets|
|Minimum FICO scores||Typically 700+||None|
|Required documentation||Significant||Minimal on the property|
|Upfront fees||Inspections, appraisals, application, etc…||No upfront fees|
We make the decisions directly
|Loan Money Received||2-3 months||Less than 10 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 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 need a “bridge Loan”
- You do not qualify for traditional financing for whatever reason (income, tax returns, unique property, etc..)
- Transaction not plain vanilla and therefore falls out of traditional lending parameters (see recent article: where to go when bank says no)
- Your credit is impaired
- Although you have ample equity, You or your property has liens, judgments, unpaid bills, etc. that cash is needed to resolve
- You have ample equity in your property and need cash
- You need business working capital (see why hard money is cheaper than factoring)
- 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 (stated loan)
- 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
Additional Resources for Commercial Hard Money Lenders
- Loan Parameters for Commercial hard money loans
- Guide for Borrowers on Hard Money Lending
- Where to go when the bank says NO!: Quick guide to Hard Money Borrowing
- Learn More about Fairview Lending
- FAQs for Private lending/Hard Money Lending
- Quick one page application
- We also offer Residential Hard Money Loans.