Hard Money Commercial Mortgages: What You'll Need to Get Approved

A hard money commercial mortgage is an alternative financing option available to buyers. While it is an alternative financing option, hard money commercial mortgages are harder to get versus a traditional home mortgage. Hard money commercial mortgages are harder to obtain due to risk associated with it. Hard money lenders will take on buyers that regular lending institutions will not approve. They take the riskier business because your property becomes your collateral. Therefore, if you default on payments to the lender, they will foreclose on your property and resell it as payment. Since the hard money lenders are willing to take the risk, they will charge you a higher interest and points. If this is an avenue that you would want to explore, there are certain items you will need to ensure your approval.

Business Proposal

Prior to consulting with a hard money lender, you will need to have a detailed plan. The plan should address the project you are trying to fund. It should explain your vision for the property. Give the lender some insight as to what you are trying to do. You can include pictures of the property in its existing state and drawings to detail transformation. Secondly, outline how the funds will be used and any cash investment. While it may appear to be obvious as to how the funds will be used, you should give a detailed proposition of how the funding will be allotted. Third, you should identify your repayment plan. You should factor in potential interest rate and the length of repayment time. This projection can give the lender an idea of how long they could expect the loan to be paid in full. Finally, discuss your exit strategy. Remember, you are presenting a business plan to lender to get them to invest. Provide as much detail as possible for them to get a clear idea of what it is you are trying to do.

Financial Analysis

To accompany your business proposal, you will want to develop a financial analysis. The financial analysis should detail the budget on the project, financial projections, market trends, and equity. These items demonstrate to the hard money lender the viability of your investment property. Hard money lenders want to invest their money into a property that can guarantee to profitable turnover. You must do your research in selecting a commercial property. Make sure that the property you selected has shown great potential in being profitable. This will improve your chances of obtaining a hard money commercial loan.


Once you have completed your loan application, business proposal, and financial analysis, it is time make a pitch to the lender. It is best to learn a head of time what your potential lender is looking to invest into. Structure your presentation to highlight these factors in your presentation. Being able to match will with your hard money lender will improve your chances of being approved. In addition, be prepared to negotiate the terms of your loan. The key is to sell your plan.


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