Hard Money Commercial Loans: When Banks Say No

Your bank passed. Your credit union passed. Maybe your existing lender won’t renew, or the appraisal came in short, or the property is in a condition no conventional lender will touch. You’ve heard about hard money loans. Here’s what they actually are — and when they make sense for commercial real estate.

What Is a Hard Money Commercial Loan?

A hard money loan is a short-term, asset-based loan made by a private lender — not a bank or federally regulated institution. The lender’s primary underwriting concern is the value of the property (the “hard asset”), not your income, credit score, or business financials.

This makes hard money loans faster to close and more flexible than conventional financing — but significantly more expensive.

Typical terms:

• Loan term: 6 months to 3 years
• Interest rates: 9%–14%+ depending on deal and lender
• Points (origination fees): 2–5 points upfront
• LTV: 55%–70% of as-is value (some lenders go to 75% on strong assets)
• Close timeline: 7–21 days in many cases

Who Uses Hard Money for Commercial Real Estate?

Hard money isn’t a last resort — it’s a tool. Experienced commercial real estate investors use it intentionally for specific situations:

Balloon maturity with nowhere to go. Your loan matures, the bank won’t renew, and you need time to stabilize the property or find permanent financing. A hard money bridge buys you 12–24 months.

Distressed or value-add properties. Conventional lenders won’t lend on properties with low occupancy, deferred maintenance, or environmental issues. Hard money lenders care about the asset value and your exit plan.

Speed. You found a deal that requires a 10-day close. Conventional lenders can’t move that fast. Hard money can.

Credit or income issues. Self-employed borrowers with complex tax returns, recent credit events, or non-stabilized income often find hard money is the only near-term option.

Bridge to a better loan. Many borrowers use hard money as a 12–18 month bridge while they stabilize a property, improve DSCR, or wait out a rate environment — then refinance into conventional or agency debt.

What Types of Commercial Properties Qualify?

Most hard money lenders will consider:

• Multifamily (5+ units)
• Retail strip centers and mixed-use
• Industrial and warehouse
• Office buildings
• Self-storage
• Hospitality (some lenders, typically higher rates)
• Special-purpose properties (case by case)

Raw land and ground-up construction are handled by some hard money lenders but at significantly lower LTVs and higher rates.

The Real Cost of Hard Money: A Quick Example

Don’t evaluate hard money on rate alone. Look at total cost of capital for your hold period.

Example: $2M hard money loan at 11%, 2 points, 18-month hold

• Origination: $40,000 (2 points)
• Interest (18 months): $330,000
• Total cost: ~$370,000

Compare that to a conventional loan that closes in 45 days at 7.5% — which would cost roughly $225,000 over the same period.

The hard money loan costs you an extra $145,000. The question is whether the speed, flexibility, or access to capital is worth it for your specific situation. Often it is.

What Hard Money Lenders Look At

Because they’re underwriting the asset, not you, hard money lenders focus on:

1. LTV / equity cushion. They want enough spread between the loan and the property value to be protected if they have to foreclose and sell quickly. Expect conservative appraisals.

1. Exit strategy. Every hard money lender wants to know how you’re getting out. Refinance into conventional? Sell? Stabilize and go agency? The clearer your exit, the better terms you’ll get.

1. Property type and location. Liquid asset classes (multifamily, industrial) in strong markets get better terms than special-purpose properties in rural markets.

1. Borrower experience. Not always required, but experienced sponsors with a track record get lower rates and more flexibility.

How to Find a Reputable Hard Money Lender

This is where borrowers often run into trouble. The hard money space has a wide range of players — from sophisticated institutional debt funds to individual investors to outright predatory lenders.

Signs of a legitimate hard money lender:

• Clear, written term sheets before any fees
• No upfront “due diligence” fees before a commitment letter
• References from prior borrowers
• Demonstrated track record in your property type and market
• Transparent about all fees and prepayment terms

Work with a broker who knows the lender landscape. A good broker can match your deal to lenders who actually close deals like yours — and steer you away from lenders who charge upfront fees and string you along.

Hard Money vs. Other Bridge Options

| Option | Speed | Rate | Flexibility | Best For | |——–|——-|——|————-|———| | Hard money | 7–21 days | 10–14% | High | Distressed, urgent, credit issues | | Debt fund bridge | 2–4 weeks | 8–11% | Medium-High | Stabilized or light value-add | | Bank bridge | 4–8 weeks | 7–9% | Low | Near-bankable deals | | Conventional refi | 30–60 days | 6–8% | Low | Stabilized, strong DSCR |

Frequently Asked Questions

Is hard money the same as a bridge loan? Not exactly. All hard money loans are bridge loans (short-term, transitional), but not all bridge loans are hard money. Debt funds and some banks offer bridge financing at lower rates than traditional hard money lenders.

Can I get a hard money loan with bad credit? Yes — credit is much less important than asset value and equity. Most hard money lenders have no minimum credit score, though significant derogatory events (recent foreclosure, active bankruptcy) may disqualify you.

Will hard money work for a balloon payoff I can’t cover? It can, as long as there’s sufficient equity in the property. The hard money loan pays off the balloon — you’re essentially trading your maturing loan for a short-term one while you figure out a permanent solution.

How RefiLoop Helps

If your bank won’t renew, your balloon is due, or you’re in a situation where conventional financing isn’t an option right now, there’s still a path.

RefiLoop works with borrowers across Texas, Florida, Georgia, North Carolina, Ohio, and more on exactly these situations. We know which debt funds and bridge lenders are actively deploying capital in 2026, what they’ll accept, and how to structure deals that actually close.

We handle loans from $200K to $15M. If you’ve been turned down or you’re running out of time, let’s talk.

Schedule a free 15-minute call — we’ll tell you straight what your options are.