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” (Property) as opposed to relying heavily on a borrowers credit, financials, etc… The loan is secured by a first mortgage.
By relying on the property as opposed to strictly the borrower, 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, tax returns, 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 when time is of the essence or borrowers don’t meet traditional guidelines for whatever reason. 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” / short term loan to help “bridge” the gap between transactions
- You do not qualify for traditional financing for whatever reason (income, tax returns, unique property, etc..)
- You are a small business owner that shows a number of expenses to try to minimize taxable revenue
- 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 or a default and restructure your debt or reposition the property
- You are a foreign national and don’t have “credit depth”
- 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.