There is a lot of confusion about the difference between hard money loans, bridge loans and mezzanine loans.  To understand the differences one must first understand the purposes for each type of loan.  Basically bridge loans and mezzanine loans accomplish very similar tasks and typically have much lower rates and costs than hard money loans.

Hard money loans are basic capital instruments designed to provide cash fast at the closing table to rescue transactions, provide quick capital for business or to take advantage of great deals when timing means everything and the ‘cost of lost opportunity’ exceed the high cost of the risk capital.  Hard money loans can be expensive until you calculate the cost of not completing a deal and losing valuable profits!

Hard money loans typically have a maximum loan to value of 60-65%.  Rates on hard money loans can be as high as 15% with some going up to 18% and the borrower can even be required to pay up-front points that can range from 5-10%.  These loans can be due in as little as 48 hours or be extended up to 1 year with two 6-month extensions and hefty penalties can apply if the lender is forced to extend.

Hard money loans typically do not have prepayment penalties because the lender actually wants the money back fast.  If you think that a hard money is expensive then calculate the cost of not being able to quickly close on that office building that $4 million medical office building you can buy today … with cash … for 25 cents on the dollar and immediately flip tomorrow to a growing medical practice for 50 cents on the dollar.  When there is $2 million of profit in a deal and you CAN’T do the deal, all of sudden the hard money loan looks very inexpensive!

Many business people and investors cry over the cost of lost opportunity and that deal that got away.  Whether it was a gas station that needed to change hands quickly or an apartment building purchase that needed rehab the standard gas station loan and apartment purchase loan just wouldn’t do.  The cost of not making those transactions happen quickly by deploying a Hard Money Gas Station Loan or a Hard Money Apartment loan was the loss of the deal and the loss of tens of thousands of dollars in potential profits!

These types of transactions happen every day in cities like Atlanta, GA and Phoenix, AZ.  Other cities where real estate was hit hard also have very similar scenarios for creating profits through commercial real estate investing strategies.  In our next blog, we’ll discuss the details of the Bridge and Mezzanine loans which are also popular loans in markets like Atlanta, GA and Phoenix, AZ.

The experts at Dividend America help businesses succeed with the quick closing and easy qualifying loans like hard money loans.  To learn more visit the Hard Money Loan Center at or email Michael Gross at or call direct 404-819-4511.