Real estate, A/R, inventory, and equipment are typical assets used to back the loan. The property owner may have to sell the property in order to satisfy the lien from the commercial hard money lender, and to protect the remaining equity on the property.Īn asset-based loan is a short-term loan secured by a company’s assets. If they have exhausted bankruptcy previously, they may not be able to gain assistance through bankruptcy protection. If the property owner defaults on the commercial hard money loan, they may lose the property to foreclosure. Traditional Commercial Hard or Private Money loan programs are very high risk and have a higher than average default rate. If the property is not bought back by purchase or sold within the time period they Commercial Hard Money Lender may keep the property at the agreed to price. ![]() ![]() Private Investment groups may temporarily offer bridge or hard money, allowing the property owner to buy back the property within only a certain time period. Some Private Investment groups or Bridge Capital Groups will require joint venture or sale-lease back requirements to the riskiest transactions that have a high likelihood of default. The property and or borrowers may be in financial distress, or a commercial property may simply not be complete during construction, have it’s building permits in place, or simply be in good or marketable conditions for any number of reasons. Since it is a commercial property, they usually do not conform to a standard commercial loan guideline either. These borrowers are usually not conforming to the standard Equifax or TransUnion or other residential conforming credit guidelines. ![]() A commercial hard money or bridge lender will usually be a strong financial institution that has large deposit reserves and the ability to make a discretionary decision on a non-conforming loan. Commercial Hard or Private Money Lender and Bridge Lender programs are similar to traditional hard money in terms of loan to value requirements and interest rates.
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