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Contrary to popular belief “hard money” loans are called hard money loans because they are difficult to obtain or because their terms are difficult and expensive conditions on borrowers. The name comes from the fact that hard money loans are loans that are, by definition, supported by a hard asset like a piece of real estate or other assets, such as an excavator or a piece of manufacturing equipment.

You can imagine everything so clearly. You have the perfect idea, either to open your own business or expand an existing one. You have it all figured out every detail, have your business plan in hand, and even have the location for your new business. There is only one small problem. When you come to realize that with your marvelous plan, apparently impeccable is a technical problem – the money is not enough. Where do you get the money to run your dream? Is there a fairy godmother for people like you to meet your wishes? Just when all seems hopeless, up to commercial mortgage lenders to save the day!

On the positive side, there is capital available for private commercial mortgage loans and can close deals quickly. Most prefer funds that produce income, the investor-owned commercial buildings and apartment complexes, office buildings or self storage facilities. In general, it will lend up to 65%, with a value of property and equity based insurance is not credit driven. They pay for the purchase and refinancing, but private loans are bridge loans and viable, realistic exit strategy must be in place. In other words, they know exactly how they will be returned.

Developers who used to build hotels and shopping malls are bidding on the construction of courthouses, office buildings and warehouses government post. Investors have recently been burned in private commercial real estate are lining up for the income trust that comes from owning real estate that is used by the government.

An investor or owner of commercial property is best bet for a conventional loan is through the community or regional banks that have a commitment to their local economies. These small centralized institutions avoided most of the derivatives and collateralized debt obligations that have affected large national players. Many are still financially sound and that sufficient liquidity to make small business loans and middle of the mortgage.

In simple terms, a bridge loan is a short-term, interim commercial mortgage loans is sometimes necessary to “close” a funding gap that may exist at the same time, the organization and the closure of more permanent financing or other financial transactions. For example, if an investor is closing on an apartment building in 3 weeks and your bank can not close your loan for the purchase of three months, she needs a bridge loan of 90 days to get your deal. Or an investor could sell a building to raise money is needed immediately, but it will take at least six months to market and sell the building. A bridge loan is the answer.

The banks are severely undercapitalized today because of the sudden and sustained depreciation of buildings and real estate derivatives they hold. They can not afford to let a dime out the door. They can not borrow against mortgage assets and not sell them, nobody wants! Without a market ready or willing to buy new commercial mortgages, banks will not write any new commercial mortgages. In simple terms, banks do not pay and will not be lending again anytime soon.

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