Small Business Terms: Hard Money Loans

by Craig Anthony

0 min read

Hard money loans are high-interest, low loan-to-value loans sometimes used by business owners as a short-term financing option. Typically, business owners who take out hard money loans have credit challenges and don’t qualify for financing through traditional lenders that offer more favourable small business lending terms. Private individuals sometimes offer hard money loans to business owners who have a lot of equity. For example, a small business owner who owns a commercial building outright would qualify for a hard money loan. The lender might end up owning a valuable piece of real estate if the business owner defaults on the loan. Business owners who take out hard money loans aim to pay them off or refinance to lower-interest loans quickly, as the high interest rate can take a big bite out of their income.

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