The word hard in hard money commercial loans only mean that you will acquire funds guaranteed by a piece of immovable asset or property which serves as your collateral. The granting of the loan will be completely based upon the asset’s value. Most developers who plan to develop a parcel of land into a property which serves commercial purposes prefer to get this type of loan. The property that the developers would like to build should have investment potential and the potential to generate future earnings that are beyond the amount provided by the loan. Note that the value of the loan is usually funded by private individuals or investors.
Most hard money commercial lenders at present are also private firms and investors who believe that the process of issuing hard money is an effective way for them to do business which guarantees substantial returns. The loan is different from conventional mortgage which lasts for more than thirty years since it only operates for a shorter period, normally within one to five years. Dealing with a commercial hard money lender is an effective means of acquiring a type of financing for your desired investment without waiting for a few months to receive approval or undergo extensive credit checks and numerous paperwork submissions. Hard money is an efficient solution in grabbing highly profitable investment opportunities refused by conventional banks.