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When you own commercial property but are either at your limit or have poor credit, there are other ways you can obtain the cash you need for your business. Hard money lenders are only interested in the value of the property, not your credit history or how much other outstanding debts you may have. However, before you enter into a hard money transaction, it’s important to understand the purposes hard money loans serve and how they differ from traditional loans.

Defining Commercial Hard Money Loans

Before an investor goes any farther, it’s important to understand the composition of commercial hard money loans and how they differ from traditional loans. There are also different qualifications than those of traditional loans which is the primary reason commercial hard money loans are so attractive to investors. Some of the circumstances that makehard money loans attractive to commercial investors include but are not necessarily limited to the following:

Low credit score

Overextended on credit

Depressed property that does not interest traditional lenders

The property does not contain all the necessary permits to open for business

The investor has the need to secure the loan with more than one property

Comparing Commercial Hard Money Loans to Traditional Commercial Loans

One of the major differences between hard money loans and commercial loans is the way they qualify potential borrowers. Hard money lenders do not look for credit worthiness but rather the value of the collateral the borrower is pledging. In fact, hard money lenders do not even concern themselves with the borrower’s income or whether he or she has filed bankruptcy. None of these factors is important to hard money lenders although they are major contributing factors for traditional lenders.

While the value of the property is also important for traditional lenders, it is not the primary contributing factor. In fact, traditional lenders do not base their decisions on any one factor but on a combination of several factors including:

Borrowers credit score

Borrower’s income

Credit experience of the borrower

Current value of the property (traditional lenders do not rate depressed properties based on future potential value as hard money lenders do)

Traditional lenders have a longer turnaround time from time of application to the time of closing

Choosing the Commercial Hard Money Lender that is Right for You

Once you determine a commercial hard money lender is the right method for you to obtain the funds you need for your business, you want to begin looking for the right lender for your needs. The first thing to keep in mind is hard money lenders prefer loaning money for commercial investment property that is close to their home base. When you know this in advance, it gives you a clue where to begin your search for a commercial hard money lender. It’s essential to take your time and find someone with whom you can work not only now but on any future projects needs you may have as well.