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The Best Times to Use a Hard Money Lender

Most people don’t know what “hard money” is and probably think hard money lenders are shady who will do anything to recover their money.

That is not the case. The hard money lending industry is a perfectly legitimate industry and hard money loans are simply short-term loans secured by real estate, where the money is lent based on the financial value of the collateral rather than the borrower’s credit score or his/her ability to repay the loan. Hard money lenders could be individuals, private companies or a group of investors using their own money and credit terms to finance real estate purchases, as opposed to banks or credit unions using depositors’ money to finance the same.

Typically, hard money loans are lent out at higher interest rates (charges being higher for defaulters), and can even incur high origination costs; but are still preferred over traditional loans in certain cases where traditional funding does not seem feasible.

The Best Times to Use a Hard Money Loan

Discussed below are the three best times you ought to use a hard money lender:

  1. If you are looking at making a quick profit from a real estate opportunity

    – This is typical of real estate investors and property flippers who are constantly on the lookout for lucrative property purchases and can make use of a hard money loan to finance the same. Since most of them are looking to hold a property long enough so it generates short-term gains on resale, hard money is the best way to go about it instead of the hassled, long-drawn bank financing structure. Also, the process here is speedier, more flexible and allows them to make the purchase promptly by giving them a competitive edge. Repayment also gets easier and is done timely with the profits acquired.


  1. If you are looking to finance your business and have not been able to get a traditional bank loan

    – Many start-up businesses go through the grueling process of applying for bank loans to get their business off the ground, but are unable to do so. Many a time, even in established businesses, money is needed to execute large projects or complete bulk orders which does not pass muster with the bank, and this is when you can use a hard money lender to obtain that much-needed capital to not only get the project going but also repay the hard money loan fairly quickly with the sale proceeds, while stashing in the extra revenue from such business contracts.


  1. If you do not have a great credit score and still need the money

    – If have just started your new job, have ever had a foreclosure on your home, credit issues or a default statement anywhere in your borrowing history, you are unlikely to qualify for a traditional bank loan in future that strictly looks at your income history, credit scores, bank account statements, etc. to determine your ability to repay a certain loan. This is where hard money loans can come to your rescue and help you snap up that perfect dream house or buy those assets you have had your eye on since long.

Do you need a Hard Money Loan for your next real estate purchase or refinance fast?