Hard Money Commercial Loans

Fast-close, asset-based commercial financing when timing, credit, or property condition rules out conventional capital — placed by a borrower-side broker with direct relationships to vetted private lenders.

Hard money commercial loans are short-term, asset-based loans secured primarily by the value of commercial real estate rather than the borrower’s credit profile, tax returns, or income documentation. For investors and operators facing a pending acquisition, a maturing balloon payment, a discounted note purchase, or a value-add reposition, hard money is often the difference between closing and walking away. Financial Compound has placed hard-money commercial loans in as few as 3 business days through long-standing relationships with private lenders nationwide^*.

What Are Hard Money Commercial Loans?

A hard money commercial loan is a private, short-duration mortgage — typically six to thirty-six months — funded by a non-bank lender and underwritten predominantly on collateral value, exit strategy, and protective equity. Unlike conventional commercial mortgages that emphasize debt service coverage ratio (DSCR), tax returns, and global cash flow, hard money lenders focus on loan-to-value (LTV), property condition, and the credibility of the borrower’s takeout plan.

These loans carry higher interest rates than bank financing — generally in the high single digits to low teens — along with origination points and modest closing costs. In exchange, borrowers receive what banks cannot offer: speed, flexibility, and a willingness to lend against story-driven deals that fall outside conventional credit boxes.

When a Hard Money Commercial Loan Is the Right Tool

Hard money is not a substitute for permanent debt. It is a tactical instrument that solves a defined problem inside a defined window. The borrowers we place hard money loans for typically fall into one of these scenarios:

• Time-pressured acquisitions — auction purchases, 1031 exchange deadlines, off-market opportunities with a 7-to-21-day close requirement.
• Maturing balloon payments — a CMBS or bank loan reaching maturity before refinance underwriting can be completed.
• Value-add and reposition projects — properties with deferred maintenance, vacancy, or below-market rents that won’t underwrite to agency or bank standards until stabilized.
• Discounted note and REO purchases — opportunities requiring proof of funds and certainty of close that conventional lenders cannot deliver.
• Bridge to construction or bridge to perm — interim capital while permanent agency takeout, SBA 504, or HUD/FHA financing is structured.
• Credit-impaired or self-employed borrowers — sophisticated operators whose tax-optimized returns make traditional underwriting impractical.
• Partnership buyouts and recapitalizations — situations where speed and discretion matter more than rate.

In each case, hard money serves as a bridge between an immediate need and a stable, lower-cost long-term capital structure. The exit strategy is the loan.

Typical Terms on Hard Money Commercial Loans

Terms vary materially by property type, market, sponsor experience, and loan size, but the framework below reflects the range we see most often across the private lending market today.

Term	Typical Range
Loan-to-Value (LTV)	55% – 70% of as-is value
Loan-to-Cost (LTC) on rehab deals	up to 80% – 85%
Interest Rate	9% – 13%, often interest-only
Origination Points	1 – 4 points
Term Length	6 – 36 months
Time to Close	3 – 21 business days
Recourse	Often non-recourse with bad-boy carve-outs
Prepayment	Frequently open after 3–6 months

Hard Money vs. Bridge Loans vs. Bank Financing

The terms “hard money” and “bridge loan” are often used interchangeably in the market, but the distinction matters when structuring a deal. Bridge loans are typically issued by debt funds and institutional non-bank lenders pricing in the 7%–10% range against stabilized or near-stabilized assets. Hard money sits one tier higher on the risk spectrum — faster, more flexible, and willing to underwrite hair on the deal that bridge lenders pass on. Bank and agency financing (Fannie Mae DUS, Freddie Mac, HUD/FHA, SBA 504, SBA 7(a)) sits at the opposite end: lowest cost, longest amortization, slowest execution, and most conservative underwriting.

A capable broker treats these as a continuum, not competing products, and structures the right tool for the deal in front of the borrower today — with the takeout already in mind.

Property Types We Finance with Hard Money

Hard money commercial loans are placed against income-producing and value-add commercial property across nearly every asset class:

• Multifamily and apartment buildings (5+ units)
• Mixed-use and retail centers
• Office and medical office
• Industrial, flex, and self-storage
• Hospitality and limited-service hotels
• Mobile home parks and RV parks
• Special-use and owner-occupied commercial
• Land (entitled, transitional, and infill)

The “Soft Money” Distinction

Since 2008, the private lending market has matured substantially. A new tier of lenders — what we call soft money lenders — has emerged, occupying the space between traditional hard money and institutional bridge debt. These lenders accept slightly more documentation, take a deeper look at sponsor experience and rent rolls, and in exchange offer materially lower rates and points than legacy hard money shops. For borrowers with a defensible story, placing a deal with the right soft money lender can save tens of thousands of dollars over a typical 12-month hold.

The market has also, unfortunately, drawn its share of bad actors. Borrowers should be cautious of any lender requesting large up-front “good faith” deposits, vague application fees, or wired funds before a term sheet is issued and underwriting is meaningfully underway. A reputable broker provides the buffer between borrower and lender — and the institutional knowledge to separate real capital from theatre.

Why Borrowers Use Financial Compound for Hard Money Placement

Financial Compound operates as a borrower-side advocate, not a lender. Our incentives are aligned with closing the right loan at the right cost — not pushing a single capital source’s product. We maintain active relationships with a curated bench of private lenders, debt funds, and family offices, and we know which sources actually fund versus which are best avoided.

In a recent industrial refinance, our team closed a hard money bridge in nineteen days that several other brokers had walked away from. We negotiate market-rate terms, hold lender points to a minimum, and structure the takeout — agency, SBA, CMBS, or bank — before the hard money loan funds, so the borrower has clarity on the exit from day one.

Hard Money Commercial Loans — Frequently Asked Questions