How to Choose the Right Private Money Lender

commercial hard money lenders

When you are looking for a private loan, you should never just pick the first one you find. Shop around to get the best rates and terms. It is recommended to go with an established firm specializing in commercial hard money lending. You can expect competitive rates and terms, as well as favorable rates. There are also some things to consider when choosing a commercial hard money lender. Read on to learn more. Listed below are some important tips for choosing the right private money lender.

Interest rates

A commercial hard money loan is an alternative to traditional bank loans. These loans offer faster approval, as the private investor is not required to review bank statements or verify income. Many hard money lenders do not use a standardized underwriting process and look at each loan deal individually. This makes it possible for you to obtain a large loan without the hassle of a traditional bank loan. However, if you need cash for a short-term investment, commercial hard money loans are probably not for you.

Commercial hard money lenders charge between 12 and 18 percent interest, which is double the interest rate on a traditional bank loan. In fact, private hard money lenders can charge even higher interest rates. These high rates are designed to attract investors, who have no other options. Therefore, it is critical to understand how hard money lenders calculate interest rates. There are four factors that affect money loan rates. These four factors will impact money loan interest rates in 2020.

Interest rates on hard money loans are usually fixed, but some can have variable interest rates. These are not the only variables that will affect your loan’s interest rate. In addition, you must be sure to check the lender’s license. Interest rates on hard money loans are set by state law and can increase very quickly, so it is important to find a licensed hard money lender. Likewise, make sure you have an attorney review your hard money loan contract to ensure that you are not being fleeced by a lender.


One of the most important questions to ask yourself when looking for a commercial hard money lender is what is involved in their fee structure. These fees are commonly calculated as a percentage point of the loan amount, so be sure to ask yourself this before you make your decision. There are other things to consider as well, such as your project’s credit score. Points are generally a percentage point of your total loan amount, but they vary greatly from lender to lender.

Besides looking at the collateral, commercial hard money lenders will also be interested in knowing what the borrower plans to do with the property once the loan has been granted. If the borrower plans on refurbishing the property in the near future, they must consider these issues before the loan agreement is finalized. If the borrower intends to sell the property later at a higher margin than the original purchase price, they must also present a practical repayment plan for the loan.

As much as possible, the borrower should have enough cash reserves to cover monthly payments. A good down payment reduces the risk for the lender and makes the loan more attractive. A higher down payment means lower fees, and a lower loan amount. The amount that the borrower can afford will depend on the amount of money that they are able to put down. But make sure you don’t overextend yourself! You want to work with a commercial hard money lender who offers competitive loan rates, so always do your homework and check their reputation.


Although commercial hard money lenders are less stringent than traditional banks, the fact remains that they still have certain requirements for lending. For one thing, hard money lenders want to know that the property will be paid off and that the borrower has a good credit rating. While hard money lenders may overlook a credit score that is under 650, a high score will ensure you receive the financing you need. You may even be required to perform a credit check, but most lenders will waive it if your score is over 700.

Another factor to consider is the borrower’s experience level in real estate. If you’ve been involved in the industry for at least 25 years, you’ll likely be more likely to get approved for a hard money loan than a first-time fix-and-flip project. If you’re a novice in the field, however, you’ll need to provide specific details about the project, reasonable assumptions, and a viable exit strategy.

Although hard money lenders typically require little pre-qualification, they do require certain documents, and you should review them with an attorney before applying. Most hard money lenders accept applications online, and many of them have their own forms you can fill out. A personal financial statement is a good example, stating the borrower’s income, assets, and debts. It also shows the lender that the borrower has sufficient funds to make monthly payments.


When you are seeking a commercial hard money loan, the term sheet is your key to success. This document outlines the terms of your loan with the lender, including the interest rate, the length of the loan, the possibility of renewal, and loan-to-value requirements. While the term sheet is not a legally binding commitment from the lender, it will give you a good idea of what to expect from your loan. It is also important to note that a term sheet does not constitute a contract between you and the lender, and can only be considered a description of your potential loan.

When choosing a commercial hard money lender, make sure you take into account your future plans. The loan agreement must consider any refurbishing that may be needed. If you intend to sell the property at a profit, you must present a feasible repayment plan to the lender. Consider the possibility of improving your commercial real estate portfolio and selling it at a higher margin than you initially purchased it for. In this case, you will need to have an escrow account set up to cover the costs of homeowner’s insurance and property taxes.

The LTV of a commercial hard money loan is determined by the ratio of the loan amount to the value of the property. Many hard money lenders only lend up to 65% of the property’s value. Hard money loans are not intended for homebuyers, but are intended for investors. Hence, they require a higher down payment than a conventional loan. For this reason, it is a good idea to have a down payment of at least 20 percent.

Patch of Land

If you need commercial hard money loans to invest in multi-family properties, office buildings, retail space, or mixed-use properties, you should consider Patch of Land. These lenders provide loans for up to three years with interest-only payments. And you can get support from a customer service agent throughout the process. Moreover, they charge between 0 and 3% of the loan amount, depending on the terms and conditions. Generally, their loans are offered at 80% LTV.

Unlike traditional lenders, Patch of Land can make quick decisions, making it ideal for small investors. Their website lets them review prospective investments and evaluate their financials. They can even request property appraisals to get a better understanding of their investment. However, before signing an agreement with any lender, make sure to check their accreditation. Once they are accredited, they can review your proposed investment and give you their feedback. Once they are satisfied with your proposal, you can start working on it immediately.

Blackburne & Sons

Family-owned Blackburne & Sons commercial hard-money lenders syndicate investment funds from about 900 accredited private investors to make permanent first mortgage loans on standing commercial properties. The firm has been in business since June 1980. Its commercial lending division is focused on helping small businesses and individual investors invest in real estate. A key strength of the firm is the ability to work with borrowers on a flexible schedule.

Private, Sacramento-based Blackburne & Sons Realty Capital is a leading provider of hard-money commercial loans. The company offers a range of loan amounts from $100,000 to $3,500,000 and a maximum LTV of 75%. Rates for loans range from 8.9% to 13.9%. The firm issues loans on many types of property, including residential, commercial, and mixed-use. Blackburne & Sons is headquartered in Sacramento, California.

Another great benefit of working with a local hard-money lender is its ability to assess projects quickly, without appraisals, and close the deal quickly. CRE lending has been booming in the last several years, creating opportunities for investors who can work with a flexible lending partner. They offer bridge loans and project-to-completion loans to help investors secure their investments. And as a member of the MBA, you can take advantage of their free commercial hard-money lender databank on the C-Loans website.

Commercial hard-money loans can be the perfect solution for start-ups and small businesses, which often lack collateral or revenue to obtain traditional financing. The approval process can take as little as five to ten days. Whether you need a small business loan to make an investment or need a larger sum of money, commercial hard-money lenders are a great option. They can help you buy your dream home.