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Hard Money Loans for Commercial Real Estate

Being a hotel or motel owner is hard work every day. You need to keep things running smoothly. When you are in need of added cash, turn to the financial experts who specialize in finding our customers the best possible hotel loan. If you are thinking about acquiring, building, or renovating a hotel or motel property, you want a lender who understands how the hospitality business works. When you contact, we can show you the lending options for your unique situation. One of these could be a hard money loan.

What is a Hard Money Loan?

A hard money loan is a type of loan secured with commercial real estate property. Commercial hard money loans provide the borrower with the money they need to purchase a commercial property quickly, typically within just a few weeks.  They are secured by a physical asset, such as a hotel or motel.  If the borrower defaults on the loan, the lender will take ownership of the property. Since hard money loans are made on properties that are in transition, they carry higher interest rates than other types of loans.  

How a Hard Money Loan Works

Hard money loans have terms that are based mainly on the value of the property being put up as collateral. The credit worthiness of the borrower is less of a factor with hard money loans than the value of the property being offered as collateral.  A traditional bank does not offer hard money loans, but private individuals or other hard money lenders do, because they see value in this type of risky venture.

Hotel and motel investors often utilized hard money loans to capitalize on opportunities in the marketplace very quickly.  A hard money loan can close quickly but comes at a higher cost than traditional loans.  However, if the opportunity is a good one, the investor will see the value of obtaining a hard money loan to secure the property and take advantage of the opportunity.   

Pros and Cons of Hard Money Loans

First, we begin with the pros:

The borrower’s credit score is less of a factor for the lender than the value of the property.  A hard money lender will relies more on the value of the property than the credit score of the borrower.

Quick Closing Time: A traditional loan process usually takes a month or two to close, whereas hard money loans generally close in just a week or two.

Short Terms: Interest rates might be on the high side, but if you are looking to repay quickly, that will not be a deterrent.

Then there are the cons:

High Interest Rates: Rates for hard money loans are significantly higher than traditional financing.

Lower Loan-to-Value (LTV): With a hard money loan, you may be only able to borrow up to 75% of the asset’s value.

Let Our Experts Guide You to the Right Hard Money Loan

Finding the right financial options for your hotel lending needs starts by talking to us. Answer a few questions and let us know your situation. We can then match you with the loan that is right for your hotel project. Speak with one of our loan experts today.

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