Hard Money Land Loans for Commercial Development

Hard money land loans are specialized asset-backed financing vehicles that are secured by a piece of real estate. They can be used for commercial construction projects, but there are some drawbacks to this type of funding.

Reasons to Seek Hard Money Land Loans

This type of financing tends to have different terms than traditional loans and will not generally be offered by standard commercial banks or other similar deposit lenders. Hard money loans, however, can be beneficial for commercial situations where the borrower has:

  • bad credit
  • an existing mortgage in default
  • an ongoing bankruptcy

Term Differences

Hard money loans for real estate purchases generally come with much higher interest rates than standard loans. This type of loan may also involve a shorter term in regard to years of financing available. Due to these two factors, hard money loans are more commonly used as an avenue of last resort.

Hard money loans used to purchase real estate are feasible for commercial projects. This type of financing will cost the borrower more, however. Considering this, careful consideration should go into the prospect.

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