Commercial hard money

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Commercial hard money is a term describing a commercial loan that is generally non bankable. The company usually does not meet the standard banking criteria, but has real estate and or assets that are sufficient to collateralize the loan to the investors/lenders.

[edit] Commercial hard money rates

Commercial hard money rates are generally higher than other rates. The industry standard range is between 11% and 16%. Typically borrowers pay between 3 and 6 points (percent of the loan amount borrowed).

[edit] Commercial hard money collateral

Commercial hard money collateral is generally real estate. It can be more than one property and it can also include other assets. When there is not sufficient equity in the property to meet the lenders loan to value ratio criteria, the borrower may pledge other real estate and "cross collateralize" the loan. Most commercial hard money lenders will not lend beyond 65% of the property value. Cross collateral loans allow loans to be made at higher amounts when the owner has more than one property to be pledged.

Property value will usually be determined by the lender, who may use a conservative approach to valuation of the property. For instance they may determine the value based on the ability to sell it in thirty days or less.

[edit] Commercial Hard Money Lenders

There are various commercial lenders that are willing to make loans against real estate collateral regardless of the credit history of the borrower. They are asset based loans and depend primarily on real estate value. Only a very few banks will make a commercial hard money loan. Mostly private investment groups and finance companies are making commercial hard money loans.