What is a hard money commercial loan? This is probably a question that has been asked so many times when one hears about it and yet has no idea what it really is. Well, this type of loan is one of the riskier commercial loans available to those who have a commercial property or are planning to acquire one. At the same time, this type of loan is offered by a commercial hard money lender and not the typical bank or financing institution you have in mind. A hard money commercial loan is provided by a private group or company or an individual investor.
Hard money commercial lenders get themselves in a riskier position than banks. Instead of approving loans by checking the borrower’s credit, they assess approval through the property. Whether you are planning to purchase a commercial property or you’re in need of funds to help your current or existing commercial property get back to its knees, a hard money commercial loan may be the answer for you. Lenders of this type of loan are beneficial to those who have poor credit history or in general, a low credit score. At the same time, this type of loan is great for those who are looking at receiving the funds quickly. Banks usually take at least 30 days to be able to process the loan and release the funds. That’s why hard money commercial loans are usually called fast money, because you can get the funds as fast as possible.
You’ll never know when you’ll need financial aid for your commercial property. It may be that your business is losing money because of various reasons and perhaps a loan is what you need to pay off the bills or renovate that property to make it more appealing. On the other hand, when you are just about to purchase a commercial property that has a high demand, there may be other investors who are likely to snatch the deal from your hands if it takes you forever to get the funds. With this kind of loan, your hard money will allow you to purchase the property faster than any traditional loan from your bank.
You’re probably wondering what the drawback is. If this kind of loan is all that good, then how come people still avail of loans from financial institutions? If lenders can accept loan applications from borrowers with poor credit and release the funds in as little time as possible, why wouldn’t all borrowers get a hard money commercial loan? Because the lenders take more risks from the bank, they do charge higher rates than the banks. For example if a bank offers you 7% interest rate, the lender may charge you 10%. Of course it all depends on the lender you choose. It’s always best to do your homework and research on the many possible lenders in your area. Make sure to know them and know about them as you check out the various rates that they offer. Don’t decide too quickly. Make sure you know everything about the loan you’re about to make.