hard money lending business plan

We earn commissions if you shop through the links below.  Read more

Money Lending Business

Back to All Business Ideas

How to Start a Money Lending Business

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on June 15, 2022 Updated on May 13, 2024

Investment range

$8,550 - $18,100

Revenue potential

$72,000 - $300,000 p.a.

Time to build

3 – 6 months

Profit potential

$58,000 - $120,000 p.a.

Industry trend

“Neither a borrower nor a lender be,” Shakespeare warned. Yet many have ignored his advice and today non-bank loans represent a $7 billion US industry. You could make good money with your own money lending business, as you’ll charge a higher interest rate and fees than those charged by banks because of the additional risk involved.

But before you start searching for investors, you’ll need to understand the process of launching a business. Luckily, this step-by-step guide has all the information you need to put you on the road to entrepreneurial success as a lender. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Before we get into the details, it’s important to clarify the type of business under discussion. Money lending businesses provide capital to individuals, generally those who cannot qualify for traditional bank loans. Money lending businesses can be structured in a number of ways:

• Private Lending – With a private lending company, you’d be lending your own personal funds to individuals, either unsecured or secured by collateral.
• Hard Money Lending – You would form relationships with money brokers and investors who would put up capital for you to use to make loans. The brokers or investors will take the interest earned and you would charge borrowers a loan fee.
• P2P Lending – Peer-to-peer lending is usually online and is basically a money lending app that connects individual lenders and borrowers. The P2P lending company usually takes a fee for the loan service. 

This article will focus mainly on a hard money lending business, which requires much less capital to start. Even so, starting a money lending business has pros and cons to consider before deciding if it’s right for you. 

• Good Money – Make 3-5% of each loan up front
• Flexibility – Run your business from home
• Large Market – Customers can be anywhere
• Build Relationships – Takes time to find investors, clients
• Attorney Fees – Need a prospectus for investors, plus loan documents

Money lending industry trends

Industry size and growth.

• Industry size and past growth – The US installment loan industry was worth $6.7 billion in 2021 after declining 1.3% annually over the previous five years.(( https://www.ibisworld.com/united-states/market-research-reports/installment-lenders-industry/ ))
• Growth forecast – The US installment loan industry is projected to continue to modestly decline over the next five years. 
• Number of businesses – In 2021, 19,551 installment loan businesses were operating in the US. 
• Number of people employed – In 2021, the US installment loan industry employed 106,935 people. 

Trends and challenges

Trends in the money lending industry include:

• Hard money loans are growing in size and more often used for home purchases. This means higher fees for hard money lenders.
• More and more cross-border hard money loans are being made due to investors wanting to expand their reach globally.

Challenges in the money lending industry include:

• Money lenders have come under much scrutiny for alleged predatory lending practices and the high rates and fees they charge.
• Regulations are continuously tightening on money lenders, creating obstacles to doing business.

Demand hotspots

• Most popular states – The most popular states for lenders are South Dakota, Minnesota, and Michigan.(( https://www.zippia.com/lender-jobs/best-states/ ))
• Least popular states – The least popular states for lenders are Indiana, Tennessee, and Virginia.

What kind of people work in money lending?

• Gender – 50.8% of lenders are female, while 49.2% are male . (( https://www.zippia.com/lender-jobs/demographics/ ))
• Average level of education – The average lender has a bachelor’s degree.
• Average age – The average lender in the US is 44.9 years old.

How much does it cost to start a money lending business?

If you decide to start a hard money lending business, your startup costs will range from $8,000 to $18,000. The largest cost will be attorney fees. You will need a prospectus to give to potential investors detailing how you will do business and how they will get a return on their investments. Such documents are complicated and costly. You’ll also need a website and a marketing budget.

How much can you earn from a money lending business?

Hard money lenders typically take a 3% to 5% fee of the total loan amount. Since a large portion of the loans you make will be for homes, these calculations will assume an average loan amount of $150,000, which would give you an average fee of $6,000 per loan. 

The interest paid on the loans will go to the investors. Your profit margin should be high, at around 80%. In your first year or two, you could do 12 loans a year, bringing in $72,000 in annual revenue. This would mean $57,600 in profit, assuming that 80% margin. 

As you build a reputation, you could increase that number to 50 loans a year. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 40%. With annual revenue of $300,000, you’d make a handsome profit of $120,000.

What barriers to entry are there?

The only barrier to entry for a money lending business is building relationships with investors, which often takes a lot of networking and leg work.

Related Business Ideas

How to Start a Credit Repair Business

How to Start a Check Cashing Business

How to Start a Finance Company

Step 2: hone your idea.

Now that you know what’s involved in starting a money lending business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research money lending businesses in your area to examine their products and services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a micro lending company or a money lender that will provide a business line of credit. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as term loans for those with bad credit, or hard money startup loans.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

You’ll need to determine what types of loans to offer, and how you will evaluate credit scores to determine whether to make the loans. You’ll need to lay out specific lending criteria in your investor prospectus. 

As far as the types of loans, you can offer mortgage loans, business loans, personal unsecured loans, car loans, or lines of credit. 

How much should you charge for money lending?

Hard money lenders typically take a 3% to 5% fee of the total loan amount. The interest paid on the loans will go to the investors. The interest rates you charge will depend on the interest rate limits in your state. Working alone, your profit margin should be high, at around 80%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will generally be anyone with bad credit who needs a loan. You should market on TikTok, Instagram, Facebook, and even LinkedIn, which is also a good way to connect with potential investors. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Money Lending Business Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “money lending” or “hard money loans”, boosts SEO
• Name should allow for expansion, for ex: “Instant Money Solutions” over “Home Sweet Loan”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

Powered by GoDaddy.com

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Money Lending Business Plan

Here are the key components of a business plan:

• Executive Summary: A brief summary of the business plan, highlighting its key points and objectives.
• Business Overview: An overview of the money lending business, including its mission, vision, and legal structure.
• Product and Services: Details about the types of loans or financial services offered, including terms, interest rates, and eligibility criteria.
• Market Analysis: An examination of the target market, including size, demographics, and trends, to identify potential customers.
• Competitive Analysis: Evaluation of competitors in the lending industry, assessing their strengths and weaknesses.
• Sales and Marketing: Strategies for attracting and retaining customers, including advertising and promotional efforts.
• Management Team: Introduction to the individuals leading the business, highlighting their qualifications and roles.
• Operations Plan: Information on day-to-day operations, such as loan application processing, risk management, and customer support.
• Financial Plan: Projections for revenue, expenses, and profitability, as well as funding requirements and financial forecasts.
• Appendix: Supporting documents, such as legal agreements, market research data, or additional information to enhance the plan’s credibility.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to money lenders.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your money lending business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2024

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a money lending business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Money Lending Business Licenses and Permits

Starting a money lending business requires obtaining a number of licenses and permits from local, state, and federal governments.

You’ll need to meet the requirements to be a licensed money lender in your state. You’ll also need to follow federal and state regulations on lending practices. 

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your money lending business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as  HES , Black Knight , or Moneylender , to manage your loan processes, accounts, credit checks, and fees. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Here are some powerful marketing strategies for your future business:

• Targeted Local Advertising: Utilize local newspapers, community bulletin boards, and radio stations to advertise your services, ensuring your message reaches the right audience within your community.
• Strategic Partnerships: Forge partnerships with local businesses like real estate agencies or car dealerships, creating a referral system where they recommend your lending services to their clients.
• Educational Seminars: Host free financial literacy seminars in your community to position yourself as an expert and attract potential borrowers seeking valuable insights into managing their finances.
• Social Media Engagement: Leverage social media platforms to engage with your audience, share financial tips, and create a community around your brand, fostering trust and credibility.
• Customer Testimonials: Showcase satisfied clients through testimonials in your marketing materials, emphasizing success stories and building credibility among potential borrowers.
• Loyalty Programs: Implement a loyalty program offering incentives or discounted rates for repeat borrowers, encouraging customer retention and word-of-mouth referrals.
• Direct Mail Campaigns: Design targeted direct mail campaigns to reach specific demographics, using compelling offers or promotions to capture the attention of potential borrowers.
• Online Reviews and Ratings: Encourage satisfied customers to leave positive reviews on online platforms, enhancing your online reputation and influencing potential borrowers in their decision-making process.
• Community Involvement: Actively participate in local events and sponsor community initiatives to increase your brand visibility and foster a positive image within the community.
• Referral Programs: Develop a referral program where existing customers are rewarded for referring new borrowers, creating a network of advocates who vouch for your services.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your money lending business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your money lending business could be:

• Bad credit? We can put you back in the black 
• Mortgage loan denied? We’ll finance your new home 
• Affordable loans to build your business

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a money lending business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in money lending for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in money lending businesses. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a money lending business include:

• Loan Processors – handle loan paperwork
• Loan Originators – take loan applications, get loan informational documents
• General Manager – scheduling, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Money Lending Business – Start Making Money!

Money lenders provide a valuable service to people unable to obtain loans, which is why it’s big business. If you can build solid relationships with investors and are committed to helping people, you could build a lucrative lending operation, even starting from your own home! 

Now that you know what’s involved from a business perspective, it’s time to launch your successful money lending business. 

• Money Lending Business FAQs

You can make a 3% to 5% fee on each loan amount, so it can be very profitable. The key is to build relationships with investors who will fund your loans.

To differentiate your money lending business, focus on providing competitive interest rates, flexible repayment terms, exceptional customer service, quick loan processing, transparency in fees and charges, and personalized financial solutions tailored to individual borrower needs.

Yes, you can start a money lending business on the side, but it requires careful consideration of legal and regulatory requirements, managing risk effectively, and ensuring proper time management and resources to handle both your main job and the lending business.

Assess the creditworthiness of potential borrowers by conducting thorough credit checks, verifying their income and employment stability, reviewing their credit history and repayment patterns, and considering any collateral or guarantors provided. Additionally, evaluate their debt-to-income ratio and analyze their financial statements to gauge their ability to repay the loan.

Expand your money lending business by partnering with local businesses, using digital marketing, offering referral incentives, exploring new regions, providing online loan applications, and improving your reputation with positive reviews.

This was a good guide for me , Thank you

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Money Lending Business Name
• Create a Money Lending Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for Money Lending Business Licenses and Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Money Lending Business - Start Making Money!

Subscribe to Our Newsletter

Featured resources.

No thanks, I don't want to stay up to date on industry trends and news.

Ask an Expert: 1-888-473-6410

How To Launch a Successful Hard Money Lending Company in 2024

February 15, 2024 | admin | Posted in General Lending

February 15, 2024

In the ever-evolving landscape of finance, opportunities arise for enterprising individuals to carve out their niche. One such avenue is hard money lending, a form of financing where loans are backed by the value of real estate assets. With the right strategy, knowledge, and preparation, starting a hard money lending company can be a lucrative venture. In this guide, we’ll delve into the essential steps and considerations for launching a successful hard money lending business in 2024.

Understanding Hard Money Lending: Hard money lending involves providing short-term loans secured by real estate collateral. Unlike traditional banks, hard money lenders focus more on the value of the property being used as collateral rather than the creditworthiness of the borrower. These loans typically have higher interest rates and shorter terms, making them attractive for borrowers who need quick access to capital or have credit challenges.

Conduct Market Research Before diving into the world of hard money lending, it’s crucial to thoroughly research the market landscape. Identify the demand for hard money loans in your target area, analyze your competition, and assess the regulatory environment. Understanding the needs of borrowers and the preferences of investors will help you tailor your services and stand out in the market.

Develop a Business Plan A well-crafted business plan serves as a roadmap for your hard money lending company. Define your target market, outline your lending criteria, and establish your marketing and operational strategies. Include financial projections, such as revenue forecasts and expense budgets, to demonstrate the viability of your business model to potential investors or lenders.

Obtain the Necessary Licenses and Permits Compliance with regulatory requirements is paramount in the lending industry. Research the licensing and permitting obligations for hard money lenders in your jurisdiction and ensure that you meet all legal obligations before commencing operations. This may involve obtaining licenses from state regulatory agencies and adhering to consumer protection laws.

Secure Funding Sources As a hard money lender, you’ll need access to capital to fund your loans. Explore various funding sources, including private investors, institutional investors, and lines of credit. Build relationships with potential investors who are willing to provide the capital you need to originate loans and grow your business. Additionally, consider leveraging your own capital to establish credibility and attract external funding.

Develop Underwriting Criteria Establish clear underwriting criteria to evaluate loan applications and assess the risk associated with each potential borrower. Factors to consider may include the loan-to-value ratio, property condition, borrower’s credit history, and exit strategy. By developing robust underwriting standards, you can mitigate risk and ensure the profitability of your loan portfolio.

Build a Network of Real Estate Professionals Networking is essential in the hard money lending business. Forge relationships with real estate agents, brokers, appraisers, and other professionals who can refer potential borrowers or provide insights into local market trends. Building a strong network can help you source quality loan opportunities and establish your credibility within the industry.

Implement Robust Due Diligence Processes Perform thorough due diligence on each loan opportunity to assess the viability of the investment and mitigate potential risks. Conduct property inspections, review title reports, and verify borrower information to ensure that each loan meets your underwriting criteria. Implementing rigorous due diligence processes is essential for protecting your investment capital and maintaining the integrity of your loan portfolio.

Provide Exceptional Customer Service Delivering excellent customer service can set your hard money lending company apart from the competition. Establish clear communication channels, provide transparent information to borrowers, and respond promptly to inquiries or concerns. By prioritizing customer satisfaction, you can build trust and loyalty among borrowers, leading to repeat business and positive referrals.

Manage Risk Effectively Risk management is a critical aspect of running a successful hard money lending business. Monitor your loan portfolio regularly, identify potential red flags, and take proactive measures to mitigate risk. This may involve diversifying your portfolio, setting aside reserves for potential losses, and implementing strategies to address delinquent loans. By staying vigilant and proactive, you can protect your investments and safeguard the long-term success of your business.

Continuously Educate Yourself The financial industry is constantly evolving, and staying abreast of industry trends and regulatory changes is essential for success. Invest in ongoing education and professional development to enhance your knowledge of lending practices, risk management strategies, and market dynamics. By staying informed and adaptable, you can position your hard money lending company for sustained growth and profitability in 2024 and beyond.

Starting a successful hard money lending company requires careful planning, diligent execution, and a commitment to excellence. By following the steps outlined in this guide and staying focused on providing value to borrowers and investors, you can establish a thriving business in the competitive world of real estate finance. With the right strategy and determination, 2024 holds ample opportunities for aspiring hard money lenders to make their mark in the industry.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

• Exploring Hardmoneyhome.com, the Premier Nationwide Directory of Exclusive Hard Money Lenders
• Navigating the Real Estate Market with Hard Money Loans
• Best Cities To Invest in Fix and Flip Oppurtunities
• Unlocking Liquidity: Strategies to Invest in Hard Money Deals in 2024
• Property Cost You Should Plan For Ahead Of Time
• General Lending

Search Our Blog

How to Start a Hard Money Lending Business

Hard money lending is a topic that’s on a lot of lips these days and rightfully so.

In today’s economic climate, people need quick ways to access cash and don’t always have the time or credit to seek loans through a traditional bank. More and more, people are accessing funds through private lenders. That means a growing demand for the people who connect the investors with the consumers. Enter the hard money lending business . Hard money lenders secure funding from companies and individuals who want to invest. Then, they match those up with borrowers who are looking to fund their projects. If you’re interested in learning how to start a hard money lending business,  you’re in the right place.  This article will cover the basics of hard money lending, the pros and cons of becoming a hard money lender, and steps you can take to start your own hard money lending business.

 By the end, you should have a good idea of whether or not hard money lending is right for you. We’ll also take a look at some of the most common questions people have when they’re interested in hard money lending.

What is Hard Money?

Depending on what part of the financial sector you’re in, hard money is defined in different ways. So as not to be confusing, we’ll use the definition that fits with hard money lending. That is, hard money is money that is secured by a physical asset’s value. That asset could be real estate property, heavy equipment, vehicles, and inventory. A loan is made based on the assessed value of that asset and the borrower usually receives a percentage of that value in a lump sum. The asset then becomes collateral for the loan. So, if the borrower is unable to satisfy the loan terms, the lender can take possession of the building, vehicle, or equipment that was valued to recoup their costs.

Hard money loans are attractive to borrowers because they’re often easier to get. Because the funds are secured by physical property, borrowers don’t have to worry as much about having a negative credit history. Hard money loans are often a fast solution to immediate cash needs. Private lenders don’t have to operate under the same restrictions as traditional banks do. So, they don’t usually require as much documentation and paperwork, shortening the application approval process. Hard money loans are also a great stop-gap for borrowers who are awaiting other, longer-term loans to come through.

Borrowers who seek hard money loans so they can fix and flip real estate property are a boon for hard money lenders. Since residential real estate properties are flying off the market faster than they have in the past – down to 36 days on the market from 44 the previous year – buyers can’t afford to sit around waiting. Competition for new homes on the market is fierce. So, it’s beneficial for them to be able to access fast cash when they need it to get a hold of that property before someone else does. Hard money loans give them what they need when they need it. Since they’re not staying with the property long term, they can repay the loan in the shorter term typical of a hard money loan.

As an investor, hard money loans are a good financial proposition. Realizing a return on investments is not dependent upon the creditworthiness of the borrower. In some cases, it’s preferable to have the borrower default on the loan and collect the property because the investor may realize higher returns. That’s not to say that investors encourage or desire failure on the loan, but this security makes hard money investing less risky and therefore more attractive. Because hard money loans typically carry a shorter term than traditional loans, investors see their returns faster.

Where hard money lenders come into the picture is connecting people who need money with the people who have it. It’s not easy for a borrower to find someone with the capital to lend them. They can’t just walk into a corporation or a wealthy individual’s home with their hand out. It takes time to build relationships with lenders who want to invest their money. The average buyer not only lacks the skills or access to these investors but usually has no reason to develop these relationships for a one-time transaction.

Hard money investors often either don’t have or don’t want to expend the resources to vet every possible borrower. They would need to not only invest their funds, but also invest in marketing, assessments, valuations, application processing, and financial verifications. It’s like starting a whole new business just to take care of the lending piece. A lot of these investors are interested in making money but don’t care to spend resources dedicated to lending. Their primary interests lie in the business they earned their money from in the first place.

This is where the need for an intermediary arises. This is where you, as a hard money lender, would step into the picture. You help investors more easily find borrowers and borrowers more likely to find investors. On the investing side, you handle identifying potential opportunities, filing paperwork, investigating assets, and vetting borrowers. On the borrowing side, you provide access to funds that would otherwise be inaccessible. You provide a central contact place for multiple funding sources and offer advice on how to best manage the loan.

That’s the big picture of hard money lending and what a hard money lending company does. There’s a lot more to explore. If becoming a hard money lender still intrigues you, read on to get more in-depth on the advantages and disadvantages of hard money lending.

Hard Money Pros and Cons

One very attractive feature of becoming a hard money lender is that you can make a living investing someone else’s money. That’s not to say that it doesn’t take any investment of your own capital to start a lending business, but most of your income will come from using investors to generate business. This means you can get into real estate and financial sectors without needing to have accumulated a tremendous amount of wealth yourself.

Since you are essentially a broker between the investors and the borrowers, you get paid upfront. You’re not usually the one investing in the loan. So, you have less risk than the lender does. If a deal goes bad, it’s your reputation on the line, but not necessarily your finances. You’re not responsible for paying the loan back to the lender.

Another advantage of getting into this business is that hard money lenders aren’t subject to the same set of rules and restrictions that banks are. Generally, that means you don’t have as much red tape to cut through and can negotiate more flexible loan terms. Hard money loans are usually processed and approved in a month or so. Shorter processing times can mean doing more business faster and making more connections.

You don’t have to be involved with real estate to be a hard money lender either. Hard money loans can be based on other assets like machinery, inventory, vehicles, and even shares in a company. This gives you a chance to diversify your business so that if the housing market takes a downturn, you aren’t reliant on it to bring in funding.

Hard money loan brokers generally operate on the local level. Having relationships with investors and knowing the local housing markets are both very important to the success of the business. With a startup staff, it can be difficult to build these relationships nationwide or to accurately read the ups and downs of the market. While this can be a very positive thing, it also means there’s more riding on local reputation.

Let’s be realistic. It’s not easy to be a startup company. Even though you don’t have to have an advanced degree or a banking background to start a hard money lending business, you do have to have a strong knowledge of financing and operations. Many of the qualities you need to be a hard money lender are the same as what you need to succeed in other startup businesses: hard work, networking, dedication, and planning.

A few startup numbers: According to the U.S. Bureau of Labor Statistics , about 20% of new businesses fail in their first year. After five years, that survival rate goes up to 50%. That means that only half of the businesses that started five years ago are still operating this year. At ten years, the percentage has fallen to 30% or roughly a third of all startups. Those numbers encompass all of the country’s startups, regardless of the type of business. The biggest growing business right now is healthcare. Transportation and construction, however, aren’t looking so good. What’s the most common reason startups fail? Failing to meet customer needs. That’s not startling, considering you already know you need customers to succeed.

Don’t expect to open your doors and immediately be flooded with borrowers. Both investors and borrowers care about their money. They want to trust the company they’re doing business with. So much of this business is done by word of mouth and referrals that you need to maintain important connections. Once you have an established reputation, things should get easier, but it can be hard starting as an unknown.

Hard money lending is regulated at the state level. To operate legally, you’ll have to know what your state’s rules are and abide by them. Should you decide to relocate, you’ll have to understand and satisfy a new set of rules. If your business is located near a state line, you’ll probably want to do business in both states. In that case, you’ll have to satisfy two sets of rules at the same time.

Are you a good fit for this industry?

Take a PROFITABILITY ASSESSMENT to find out.

When meeting a potential new referral partner you start by

Are you more likely to see

For long term business success you should focus on

Is it usually better to start a conversation by

In conversations do you focus more on

When thinking of my current income and free time:

My current employment is

When you face failure or a set back are you more likely to

Are you more driven to

Are your colleagues more likely to describe you as

Starting A Hard Money Loan Business

If you’re not discouraged by the statistics and are the kind of person who enjoys a challenge, getting into the hard money loan business could be a good choice for you. For someone good at networking, already has a strong connection with real estate, and understands what borrowers and investors are looking for, hard money loans can make you some money. The good news is that people always need money and people always want to make more of it.

Here are a few steps to help you get started in the hard money lending business.

Step 1: Establish yourself officially as a business. That means going through the process of incorporating or becoming an LLC. You’ll have to register your business and apply for a tax identification number from the IRS. You might also need one from the state or states you plan to work in.

Step 2: Obtain the right licenses and permits. The fastest way to get your business shut down is to fail to get the right permissions. Make sure you’re transparent about them once you do have them. This will lend your business some credibility and legitimacy.

Step 3: Establish a business account and keep your personal finances separate. It’s easy to get in hot water when you don’t make a clear separation between what you own and what the business owns. Having a dedicated bank account for your business makes that a thousand times easier.

Step 4: Get insurance to protect the business. In some cases, insuring your company is a requirement of maintaining your license. You also want to have protections in place to cushion you from the unexpected. If you’re operating out of a brick and mortar office, you need to have the building insured as well.

Step 5: Contact an attorney. Even if you’re an investment genius, you might not be a litigation expert. There’s a reason that attorneys have to go through rigorous education and exams. The law is a full-time pursuit that takes special training to fully understand. Hiring someone to make sure you have your legal ducks in a row is highly advisable.

After that, some good thing to keep in mind are:

Word of mouth is the best way to build a business. This means you need to treat people fairly and burn as few bridges as possible. If you haven’t already established a network with lenders and other brokers, there are business groups you can join that not only boost your numbers but give you a chance to meet others in the industry for advice and referrals.

Find a niche to operate in or, rather, a focus. Diversification is indeed important, but you can’t market to everyone all the time. If you specialize in securing funding for minority-owned small businesses or real estate loans for non-profits, focus on becoming the best in that niche. This way you can hone in on the needs of that specific group and how you can meet them better than anyone else.

Make referrals to other brokers. It might seem like this is giving business away, but it’s quite the contrary. As mentioned above, you can’t fill every niche yourself. Other brokers might be better at something than you are. Sending customers that fit their business over to them encourages them to return the favor and you’re still helping your customer. Both are solid reputation builders.

Be as transparent as possible. Integrity is essential in the hard money business. Don’t pretend to have experience or resources that you don’t or make claims you can’t back up. You want a reputation as trustworthy and dependable, not as a scam.

Loan Broker Industry Orientation

Hard money faqs.

There are some common concerns for those looking to get into the hard money lending business. After all, you want to be armed with as much info as you can get to succeed, right? Below are some frequently asked questions concerning starting your own hard money lending business.

Q. Do I need my own money? The answer is yes and no. You could start with a hard money loan yourself or find an investor to give you the funds upfront. For the licensing, permits, and insurance, you may have to initially invest your own capital.

Q. Do I need a degree? Unless your state requires it, you don’t necessarily need an advanced degree, but it helps. You can also start as an intern to learn about the business that way. Strictly speaking, you can have the knowledge you need without the degree. It does affect the perception of your qualifications, however. If you can show that you know your stuff, that’s sometimes all you need.

Q. How do hard money lenders make money? According to the job search site, Simply Hired , the average loan broker’s salary is $83,686 per year. The highest salary measured in their survey was $195,496. So, how do they do it? Lenders make money on commissions paid by the investors, fees paid by the borrowers, or both.

Q. How is a hard money lender different from a bank? Banks have to operate under very strict conditions to be compliant with federal laws. That makes the application process more restrictive and the loan terms less flexible. Bank loans generally have lower interest rates, but longer repayment periods. Their lending criteria are based on the borrower’s creditworthiness and the loans are long term.

Q. What gives one hard money lender an edge over another hard money lender? There is certainly competition in the hard money lending game. The more successful lenders will have better customer service, be able to lend money faster, and have lower interest rates than their counterparts.

Q. What is the average interest rate for a hard money loan? There is no national standard interest rate for hard money loans. They vary by region and lender, but they’re typically between 7% and 15% of the principal.

Q. What are points on a loan? Points are a way for borrowers to pay lenders for a lower interest rate. Borrowers can pay a certain amount of interest upfront for a point. Each point they buy lowers the interest rate by a percentage.

The hard money lending business isn’t always easy, but it can come with great rewards. Following the guidelines in this article should give you a good start on understanding the business and starting your own. Remember that trust and transparency are important for your professional reputation and that most deals are done from that reputation. So, keeping up compliance with government regulations, being open about your rates and procedures, and responding to customer demands appropriately are essential to your success. There will always be someone who’s been in the business longer. Don’t be too proud to ask for advice and mentorship from them.

With hard work, dedication, and a little luck, you’ll be brokering hard money loans with ease and realizing great returns on your new business.

Contact the Commercial Loan Broker Institute

Learn about our comprehensive business loan broker program.

If you are interested in receiving affordable loan broker training on your terms, contact the Commercial Loan Broker Institute. We can make specific accommodations for your schedule, the speed at which you learn and your location. We provide intensives, weekends, a virtual academy and one-on-one coaching support to new and established loan brokers. A dedicated coach will provide you with full support throughout the process to make learning easier for you. We can also provide you with a package of useful tools that will make it easier to run your firm effectively. 

You don't need to start your loan broker business alone!

Our comprehensive broker launch program includes training, marketing, an instant lender network, and ongoing coaching and support.

How to Set Up a Hard Money Lending Business

• Small Business
• Setting Up a New Business
• Setting up a Business
• ')" data-event="social share" data-info="Pinterest" aria-label="Share on Pinterest">
• ')" data-event="social share" data-info="Reddit" aria-label="Share on Reddit">
• ')" data-event="social share" data-info="Flipboard" aria-label="Share on Flipboard">

How to Create a Lending Business

How do i assess the value of a new business venture, how to make financial statements for a startup construction company.

• What Is the Role of a Business Plan in Getting Venture Capital Funding?
• What Types of Stock Should a Forming Company Issue?

The hard money lending business is a hard asset (real estate) based business. You will need to consider several factors while structuring your company. One factor is whether you will be using your money or seeking investors. A second factor is whether you will be making loans locally, nationally or internationally. Third, you will need to determine what you are investing in -- real estate, start-up companies or early stage businesses. The fourth factor is the type of businesses that you will lend money to, such as technology, real estate development, construction, residential or commercial.

Using Your Money

Start by naming your company and obtaining a corporate address, phone and fax number. These are essential regardless of how you legally structure your business because your legal documents will need a corporate address. Contact the secretary of state's office, on your state's website, to reserve your company name.

Meet with a lawyer to determine the legal structure of you hard money lending business. The most likely legal structure will be a limited liability company. Your attorney needs to be an expert in business and real estate. Discuss with your attorney the appropriate state of incorporation, tax issues, licensing and the different legal issues concerning residential and commercial lending. Have your attorney set up your employer identification number with the IRS.

Research your particular investment focus. Perhaps you have an expertise in small apartment buildings or tech companies. You will want to focus on what you know and learn what the markets are doing in your space. For instance, if you are investing in apartment buildings, you need to know the rents in the area, property values, comps (values of similar properties nearby), business environment and other factors that affect the current and future value of the property and the ability of the borrower to repay.

Purchase business planning software and draft your business plan and underwriting criteria based on the types of loans you will be making. Develop such items as your loan to value parameters, minimum and maximum investment amounts, interest rates charged, property types such as manufacturing plants, office buildings, strip malls or apartment buildings, and payback periods. Think of your business plan as your road map that keeps you on track.

Put together your financial projections. Regardless of the fact that you are investing your own money, you need to know the break-even points, projected monthly and annual income based on various interest rates charged, monthly expenses, legal costs and other expenses. You will need to develop a balance sheet, income and cash flow statements, and a profit and loss statement.

Buy your domain name, set up your website and launch your business. Have the website professionally done and put an intake form on the site so you can pre-qualify projects online. Make certain to request information such as project type, loan requested, length of loan, value of property, location, and other important factors based on your lending criteria.

Launching a Hard Money Lending Business Using Investors

Complete all the above steps, coupled with a discussion with legal on the documents required to raise capital for your business. You need to determine in what states you will be seeking investors. Your attorney will need to be versed in "blue sky law," which are state laws to protect investors from fraud. Direct your attorney to draft the stock subscription, stock purchase and shareholder rights agreements.

Hire an experienced management team. You will need a team that has been successful in the past and knows the real estate and banking sector. Team experience adds credibility and makes raising investment capital easier.

Draft a two-page executive summary and 20-page investor focused PowerPoint presentation. The executive summary needs to make clear the amount of capital you are seeking and clearly captures the essence of the business model. The PowerPoint needs to include use of funds and the returns that investors can expect. Edit and review your PowerPoint at least five times.

Develop your risk management and underwriting program. This protects you and your investors. You have a responsibility to investors to manage risk appropriately in order to protect them and to protect you from litigation should loans go bad or the business fails.

Begin raising money and looking for projects to fund. Having a network of commercial real estate brokers will bring you a great deal of business. By having projects that are undergoing the pre-funding due diligence process, while seeking capital, provides you a portfolio of projects that will attract investors.

• Foreclosure University: The Truth About Hard Money Lenders
• Bank Rate; 'Hard Money' The Source for Last-Resort Loans; Michael D. Larson; April 27, 2001
• US Small Business Administration: Follow These Steps to Starting a Small Business
• Winter and Company
• When raising capital from investors, it is the law that they be accredited investors -- individuals with more than $300,000 in annual income and assets over $1 million, excluding their home. You must follow the Securities Act of 1932 and various regulations such as Reg D.

Grant Houston has been writing since 2000, covering various political, business and market events. With a Bachelor of Arts in economics and political science, he has written articles for "Political Economic Review," UmarKit, LLC and Shadow Company. Houston has also authored business plans and consulted with companies on capital acquisition strategies.

Related Articles

Raising money for a privately held company, how to become a registered lending company, how to draw up a legal contract for a business investment, how to make money with hard-money loans, structuring a small business investor deal, the importance of a business plan, how to raise capital for real estate using a business model, methods for financing capital projects, how to get funding for your corporation, most popular.

• 1 Raising Money for a Privately Held Company
• 2 How to Become a Registered Lending Company
• 3 How to Draw Up a Legal Contract for a Business Investment
• 4 How to Make Money With Hard-Money Loans

• PRO Courses Guides New Tech Help Pro Expert Videos About wikiHow Pro Upgrade Sign In
• EDIT Edit this Article
• EXPLORE Tech Help Pro About Us Random Article Quizzes Request a New Article Community Dashboard This Or That Game Popular Categories Arts and Entertainment Artwork Books Movies Computers and Electronics Computers Phone Skills Technology Hacks Health Men's Health Mental Health Women's Health Relationships Dating Love Relationship Issues Hobbies and Crafts Crafts Drawing Games Education & Communication Communication Skills Personal Development Studying Personal Care and Style Fashion Hair Care Personal Hygiene Youth Personal Care School Stuff Dating All Categories Arts and Entertainment Finance and Business Home and Garden Relationship Quizzes Cars & Other Vehicles Food and Entertaining Personal Care and Style Sports and Fitness Computers and Electronics Health Pets and Animals Travel Education & Communication Hobbies and Crafts Philosophy and Religion Work World Family Life Holidays and Traditions Relationships Youth
• Browse Articles
• Learn Something New
• Quizzes Hot
• This Or That Game
• Train Your Brain
• Explore More
• Support wikiHow
• About wikiHow
• Log in / Sign up
• Finance and Business
• Business by Industry

How to Start a Money Lending Business

Last Updated: April 15, 2024 Fact Checked

This article was co-authored by Clinton M. Sandvick, JD, PhD . Clinton M. Sandvick worked as a civil litigator in California for over 7 years. He received his JD from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013. There are 11 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 329,433 times.

If you want to start a money lending business, you will need to decide what kinds of loans you want to make—payday, mortgage, or installment loans. You may choose to start a lending business using only your own money or money from a group of investors. Starting a money lending business will require that you develop a business plan and gain the necessary government licenses.

Preparing to Start the Business

• You should search your state’s business filing office to find out if a name has already been taken.

• Executive summary. You will need to briefly describe the nature of your business and why you think it will be successful. The executive summary should contain your mission statement as well as company information. As a startup, you should focus on explaining how your experience and background will contribute to the business’s success.
• Company description. Explain the nature of the business, your intended market, and the market needs your lending business will satisfy. For example, you might want to meet the small loan needs of your community, which are underserved.
• Also identify your competitors and describe their strength or weakness in the market.
• Product line. Describe the loans you want to make. You should explain the advantages of your loans over those of competitor’s.
• Marketing and sales. Discuss your overall sales strategy, including your plans for growth. For example, you may hope to grow geographically, offering your loans to a larger community. Or you might hope to grow by offering additional types of loans to your current market.
• Financial projections. Based on your market analysis, you should forecast your projected finances for five-years out.

• Some money lenders have dipped into their retirement accounts, such as their IRAs and 401(k) accounts, to fund their loans. Experts encourage money lenders who do this to understand the risks that they are taking. For example, loans might not be repaid, in which case you could lose a large percentage of the loan amount. [3] X Research source
• If you seek funding from investors, then you will need to work closely with a lawyer to draft a prospectus to share with investors. State and federal laws tightly regulate how you advertise securities to potential investors. Your lawyer will need to be experienced in securities regulation.

• Generally, you will assess risk by gathering information about the loan applicant’s financial history. For example, you would want to look at their income, FICO score, and other debt load. [4] X Research source

• To find an experienced business lawyer, you can visit your state’s bar association website, which should run a referral program.
• You can research any attorney by visiting his or her website. Look for experience with business formation, as well as banking or lending experience. If you are starting a lending business for real estate, then look for an attorney who has real estate experience as well.

• You can purchase your domain name from various registrars. Search the internet for “where to purchase domain name” and look at the different companies that provide this service.

Registering Your Business

• To incorporate, you will have to file articles of incorporation with your state. Your attorney should be able to get them, or you can get them yourself from your Secretary of State.

• In addition to state licenses, you may need municipal or local licenses. You must contact your state business licenses office and search for applicable licenses or permits. The Small Business Administration has links to each state’s office at https://www.sba.gov/content/what-state-licenses-and-permits-does-your-business-need .

• Not every state requires that you register a “doing business as” name. You can check registration requirements with your Secretary of State office as well as with your county clerk’s office.

• You should check with your attorney whether or not you need to register the securities and which agency you need to register with.

• You can apply for an EIN online. This is the preferred method. [6] X Trustworthy Source Internal Revenue Service U.S. government agency in charge of managing the Federal Tax Code Go to source To start the application, visit the EIN Assistant at https://sa.www4.irs.gov/modiein/individual/index.jsp .
• You can also apply by mail or fax by printing off Form SS-4 available at http://www.irs.gov/pub/irs-pdf/fss4.pdf . To find out where to mail or fax your form, you should visit the IRS website at https://www.irs.gov/filing/where-to-file-your-taxes-for-form-ss-4 .

• Under federal law, specifically the Fair Debt Collection Practices Act, you are prohibited from harassing or abusing the customer that owes you money. [7] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source Also, you cannot use false, deceptive, or misleading means to collect any debt. [8] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source If you fail to obey federal law, you and your business could face stiff civil penalties. [9] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source
• Each state will also have laws prohibiting certain debt collection activities. For example, in Iowa, you are prohibited from making illegal threats or from coercing or attempting to coerce a customer into paying a debt. [10] X Research source

• To find a compliance professional, you can ask your lawyer for recommendations. Alternately, if you met anyone at a national conference or panel, you could contact them for a recommendation.

Launching Your Business

• Rent is often one of the largest expenses for a new business. Accordingly, you should budget and not spend more than you can afford.
• Try to negotiate a one- to two-year lease with an option to renew. Because you don’t know if your business will be successful or not, you shouldn’t sign an initial lease for longer than that.
• Find out what other expenses you might incur in addition to the rent. For example, you could have to pay for maintenance and repair, upkeep, and utilities.
• Negotiate some add-on clauses, such as a right to sublease or an exclusivity clause (which prevents a landlord from leasing to a direct competitor at the same location).

• Business tax identification number (or Social Security Number if sole proprietor)
• Business license
• Business name filing document
• Articles of incorporation with corporate officers listed (for a corporation)

• If you are lending money for real estate, you will need not only the promissory note but also the mortgage note. Lenders working in the real estate field also typically use other documents, such as Letters of Intent (LOI) and preliminary title reports. [13] X Research source You should ask your attorney or compliance professional about what other contracts are necessary.
• For more information on loan agreements, see Write a Loan Agreement.

• If you want to make a few loans to acquaintances or people in your neighborhood, you could rely on word of mouth. However, if you want to reach a larger market or grow more quickly, then you should consider advertising in newspapers or online.
• You should also consider advertising in the form of imprinting your company name on pens, paper, calendars, and other giveaway items.

Expert Q&A

• Some experts recommend that you lend locally, preferably within 100 miles of your physical location. [14] X Research source Thanks Helpful 0 Not Helpful 0
• Running a collateral-free loan is an added advantage to run a successful lending business. Thanks Helpful 25 Not Helpful 6
• You should not underestimate the amount of work it will take to start a money lending business. If you find it difficult to write a business plan, you might want to rethink your objectives. Thanks Helpful 14 Not Helpful 5

You Might Also Like

• ↑ https://www.profitableventure.com/starting-a-micro-money-lending-business/
• ↑ https://www.sba.gov/writing-business-plan
• ↑ https://www.investopedia.com/terms/l/loan.asp
• ↑ http://www.creditinfocenter.com/mortgage/guidelines.shtml
• ↑ https://www.sba.gov/business-guide/launch-your-business/register-your-business
• ↑ https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
• ↑ https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text
• ↑ http://www.nolo.com/legal-encyclopedia/iowa-fair-debt-collection-laws.html
• ↑ https://www.pacificprivatemoney.com/6-tips-for-a-successful-private-lending-practice/
• ↑ https://www.sba.gov/business-guide/manage-your-business/buy-assets-equipment
• ↑ http://www.fortunebuilders.com/becoming-private-money-lender-part-2-breaking-private-money-loan/

About This Article

To start a money lending business, you’ll need to draft a business plan and obtain the necessary licenses by completing the paperwork required by your state. Your business plan will need to include the types of loans you want to make, such as payday or mortgage, and strategies for how to grow your business. That way, you can attract potential investors, which is typically less risky than using your own savings. You should, however, work with an attorney experienced in securities to ensure you acquire your investments legally. Your lawyer can also help you apply for the needed licenses and register your business as a corporation, sole proprietorship, or whichever type of company you choose to be. For more advice from our Legal co-author, like how to advertise your new business, keep reading! Did this summary help you? Yes No

• Send fan mail to authors

Reader Success Stories

Pabalelo M.

Did this article help you?

Elsa Ngwele Toa

May 13, 2019

Tebogo Lepota

Nov 14, 2021

David Pittman

Jan 19, 2019

Jamar Jackson

Apr 29, 2018

Featured Articles

Trending Articles

Watch Articles

• Terms of Use
• Privacy Policy
• Do Not Sell or Share My Info
• Not Selling Info

wikiHow Tech Help Pro:

Develop the tech skills you need for work and life

• Social Media
• United States
• United Kingdom
• Telegram Community
• Blogging Course

How to Start a Money Lending Business (Step-by-Step Guide for 2024)

Would you like to learn how to start a successful money lending business? It is no longer new that alternative finance is fast becoming a norm all over the world as small businesses and individuals seek a faster way to get funds. In a report by Grandviewresearch, alternative finance was valued at USD 10.82 billion and is expected to attain a growth of 20.2% compound annual growth rate (CAGR) from 2023 to 2030.

This is an industry with huge growth and profit potential. If you are searching for a guide on how to start a money lending business step by step, search no more. In this guide, we will give you all the information you need to start your money lending business. You will also learn how to succeed in this business.

What is a Money Lending Business All About?

Table of Contents

This is the first place to start. You shouldn’t start a business that you don’t know what its primary nature is because attempting to do so will be a free ride to disaster. 

This is a form of business where a money lending company provides loans to businesses and individuals that can’t qualify for the traditional bank loans with an interest which can be simple or compound interest.

Now that you know what your intended business is about, let’s move to the next step.

Types of Money Lending Businesses and How They Work

Money lending business is broken into three types and it is important to know them before choosing the one you are going into. Below are the three types of money-lending businesses:

1. Private Lending

If you operate a private lending company you will be lending out your personal funds. This means that when there is a loss or damage, the weight will be on you alone, and equally when there is a profit they come to you.

2. Hard Money Lending

This is the opposite of a private lending company. Unlike in private lending where you run the business with your personal funds, here you work closely with investors and money brokers. 

Investors and money brokers are the ones that will provide the capital for the business. In this type of money lending company, the brokers or investors bear the loss and also they take the interest on the loans. You only make money by charging the borrowers a loan fee.

Hard money lending must be backed with a real estate property.

Peer-to-Peer Lending

As the name suggests, this is a type of lending that happens between peers. As a P2P company owner, your job is to connect lenders to borrowers while you charge a fee for each transaction.

It’s the responsibility of the peer-to-peer platform to verify the creditworthiness of the borrower before making their loan application open to the investors (lenders). From time to time, lenders browse through the platform in search of who to lend money to for a profit in return.

• How to Start a Successful Chemical Trading Business
• How to Start a Profitable Pharmacy Business in the United States
• How to Start and Grow Your Own Immigration Consulting Firm

Guideline on How to Start a Money Lending Business

Know your target market.

No business can survive with patronage and that is why understanding your target market is very crucial. Knowing your target market before starting your money lending business will help you understand what you are up against in terms of risk, competition, potential profit, etc.

Take your time to research the alternative finance industry to understand the business landscape, the customers, and their pains and expectations.

Choose a Business Name and Check Availability

After you have researched your target market, it is time to brainstorm a name for your business. Your business name is its identity, therefore you need to carefully choose one. 

When choosing a name for your business make sure it is short, easy to remember and pronounce, and also unique. A short, easy-to-remember and pronounce makes it easier for your brand to stick in the minds of your customers. Always check and make sure that no other business is using the name. 

An easy way to check the availability of the name is by searching it on the internet. You might as well check the internet for AI tools for business name suggestions. The one you settle with must be one that will suit your choice of domain name .

Register a Domain Name and Setup Your Website

This is not debatable or optional. Every business that has a long-term goal in this time of the internet needs an internet presence and should take it seriously. You need a place where your customers can access your services anywhere they are.

Go on Namecheap , search for your business name, and register it.  After registration, host it on HostGator and set up your website. You can hire the service of a website developer to set everything up for you.

Register Your Company

If you are in the United States of America, visit your state’s Secretary of State office or Department of Revenue to register your business. If you are in a different region visit the equivalent in the country where you are in. 

Develop Your Money Lending Business Plan

A business without a plan is one without goals and strategy. A business plan will keep you in check. It also helps your customers to understand the business. Develop a detailed plan for your money lending platform. 

Below are the key elements of a good business plan:

• Business Overview: This is where you present the company’s vision, mission, and plans.
• Industry Analysis: Showcase your understanding of your business industry. The trends, challenges, etc.
• Competitive Analysis: Analyze your business competition.
• Customer Analysis: Analyze your potential customers. 
• Marketing Plan: Explain your marketing strategies, costs, products, and services.
• Management Team: Introduce the management team and their roles.
• Operations Plan: You will explain how you intend to run your daily operations of the company.
• Financial Plan: Here you explain everything about financing the business.
• Executive Summary: This section briefly summarizes what your business is all about in simple words so readers can easily understand.

Secure and Equip Your Physical Office for the Business

Just as an internet presence is important for businesses, having a physical office is also important. Having a physical office adds a level of credibility to your business. 

Always make sure that your office can be easily located. Do not site your business in an environment where a large number of your competitors are. This is important because you are new and not yet known.

Secure a space for your physical office where your customers can easily walk in. Furnish it with all the office supplies to make it more organized. Follow these quick tips to improve your office space on a budget .

Buy the needed equipment like chairs, computers, etc., and install the necessary software used in the money lending business. A typical example of the money lending software your business needs before you start is the loan origination system (LOS). This is a loan processing and servicing system.

Loan origination system technology helps financial institutions generate loan documentation in a way that complies with regulatory and internal requirements.

Get the Funds for Your Lending Business Ready

If you are establishing a private lending company you should have your capital ready at this point and if you are going into hard money lending, you should have your brokers and investors.

Apply for Necessary Licenses and Permits

There are a number of licenses and permits you will need to meet their requirements before starting a money lending business at both the state and federal levels. These licenses and permits vary depending on the country and state of your business.

Open a Business Bank Account and Get a Business Credit Card

After registering your business with the appropriate bodies, it is now time to create a business bank account. 

Do your findings of the available banks and make a choice. You should make sure that the bank’s service is friendly to businesses. 

After you have chosen a bank, visit the bank and provide documents like proof of incorporation, either driver’s license or passport, and proof of address. If there are additional documents they will inform you. 

• 5 Benefits of Opening a Digital Bank Account and Possible Challenges
• 5 Best Digital Banking Platforms in the World for Small Businesses
• 50 Tech Companies the Silicon Valley Bank (SVB) Crisis Might Affect

Get Business Insurance for Your Money Lending Business

In life nothing is 100% guaranteed therefore don’t leave your business vulnerable. Getting insurance means that your business is covered if any damages occur. Some of the insurance options include:

• General liability insurance :  This insurance is an all-in-one insurance that covers everything that can be covered in your business.
• Auto insurance :  This type of insurance covers damages on your automobiles.
• Commercial property insurance :  This policy takes care of damages on your commercial properties by fire or vandalization.
• Equipment Breakdown Insurance: Takes care of repairing or replacing equipment due to mechanical issues.
• Professional liability insurance : This policy covers your business in the situation of a client’s claims of a loss.

It’s Time to Start Your Money Lending Business

Let friends know you read this:.

• Click to share on Twitter (Opens in new window)
• Click to share on Facebook (Opens in new window)
• Click to share on LinkedIn (Opens in new window)
• Click to share on Pinterest (Opens in new window)
• Click to share on Reddit (Opens in new window)
• Click to share on Telegram (Opens in new window)
• Click to share on WhatsApp (Opens in new window)

RELATED ARTICLES MORE FROM AUTHOR

What is Decentralized Finance? Beginner’s Guide

7 Most Profitable Business Opportunities for an Immigrant in Canada

7 Profitable Online Business Ideas for a Busy Stay-at-Home Mom

Leave a reply cancel reply.

Save my name, email, and website in this browser for the next time I comment.

Notify me of follow-up comments by email.

Notify me of new posts by email.

Connect with Us

Editor picks, 5 ecommerce success stories to help you build a thriving webshop, 5 ways to boost your social proof as a blogger, 5 ways online stores can protect themselves from cyber attacks, 5 tips for setting up a widely successful content marketing agency.

EVEN MORE NEWS

POPULAR CATEGORY

• Business 610
• Finance 194
• Marketing 179
• Business Tips 137
• e-Commerce 134
• Privacy policy
• Write for Us

Join Our Email List For Weekly Business Tips & Strategies

Thank you for subscribing to our newsletter. Click here to join our Telegram community.

How To Start A Hard Money Lending Business

• Video Details

11,422 View

Share this Video

So you want to start a hard money lending business, but are not sure how it will be taxed or structured? In this video, Clint Coons, Esq. will explain how to start and structure a hard money lending business in less than ten minutes. There are a few steps that you need to mind when setting up this exciting new venture in your life. "How do you determine which way to go?" 3:22 There are a number of decisions and routes one can select but having the right information is vital in making the right choices to ensure your success. Claim Your FREE 45-minute Investment Strategy Session to receive business planning tips and asset protection. 👉 Clint Coons, Esq. is here to give you the insight you didn't even know you needed to help you get your hard money lending business off the ground. Find yourself in the winner's circle through your own hard work and the teachings of this video. Without any more introductions, watch our latest installment to the channel and further build up your mind for business. Furthermore, consider subscribing to the channel and sharing our content on different platforms. This will help us build our community and is essential in reaching a wider audience. Lastly, leave us a comment. From video suggestions to simple words of praise, we love to read what you leave us, so don't be shy. Until we release our next video, we are wishing you luck and fortune. Show Notes: 0:00 Intro 0:53 Two-Sides 2:44 S or C Corps 4:47 WY LLC 6:17 The Lender 8:46 Outro --------------------------------------------------------------------------------------------------------- SUBSCRIBE ~~~~ FREE REAL ESTATE INVESTMENT STRATEGY SESSION Claim Your FREE 45-minute Investment Strategy Session to receive business planning tips and asset protection. 👉 FREE TAX & ASSET PROTECTION WORKSHOP Learn about Real Estate & Asset Protection from Clint Coons, Esq, and Toby Mathis, Esq. at our next all-day free Livestream 9 am to 4 pm PT. on Saturdays. Our attorneys and specialists will answer ALL questions: 👉 Save Your Seat: ~~~~ FINANCIAL PLANNING & RESOURCES Download your free copy of Un-Tax Yourself eBook and discover the secret to real estate wealth is in the tax deductions. For financial strategies, podcasts, articles and details on upcoming workshops visit Here’s a little about me and my book Asset Protection for Real Estate Investors ~~~~ FOLLOW US: Instagram: Facebook: Twitter: LinkedIn: ~~~~ CONTACT US Phone: 800.706.4741 Email: [email protected] Fax: 702.664.0545 ABOUT CLINT COONS Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth. --------------------------------------------------------------------------------------------------------- The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice. #moneylenders #businessstructure #hardmoneylenders Read More By: Clint Coons Esq. | Real Estate Asset Protection Title: How To Start A Hard Money Lending Business Sourced From: www.youtube.com/watch?v=Ez33FCvqlc4 _______________

more from the author

Hard Money Lenders Explained | How

The Easiest Way to Invest in Real

How To Buy Your First Rental Property

How To Get Rich From The 2024 Real

Recommended for you.

How to Underwrite Hard Money Loans in

How Can I Become a Private Money

Using Hard Money Loans to rehab

Hard Money lending is one way of

How Hard Money Loans Work in 2024!

How to Find Private Money Lenders for

HOW HARD MONEY LOANS WORK

💰 How to Prequalify For a Hard Money

Hard Money Lending Business 101:

Private Money Lending Business

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

Is a Hard Money Loan Right for Your Business?

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

250+ small-business products reviewed and rated by our team of experts.

95+ years of combined experience covering small business and personal finance.

50+ categories of best business loan selections.

Objective and comprehensive business loans ratings rubric. ( Learn more about our star ratings .)

NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.

What is a hard money business loan?

A hard money business loan is a type of loan backed by property, such as commercial real estate or land.

Because these loans rely heavily on the value of your collateral — as opposed to more traditional loan requirements — they’re often used by business owners who can’t qualify for other small-business loan options. However, hard money loans can be risky, with high interest rates and short repayment terms.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

How hard money business loans work

Hard money loans are usually offered by private investors or lenders, as opposed to banks or credit unions. These lenders underwrite your application based largely on the value of your collateral, instead of focusing on more traditional criteria, such as your credit score and business finances.

The value of your collateral also impacts your loan amount. Hard money lenders generally use the loan-to-value ratio , or LTV, to determine how much capital you’re eligible to receive and to assess the risk of lending to your business.

LTV is calculated by dividing the loan amount you borrow by the value of your collateral . For example, say your collateral is worth $100,000. To avoid taking on too much risk, the lender decides to offer you a $65,000 loan. That would make your LTV 65%: $65,000 / $100,000 = 0.65, or 65%.

Hard money lenders typically offer loan amounts with LTVs that range from 50% to 75%, whereas traditional lenders may offer 80% to 90%.

Because these loans are tied directly to the value of your assets, hard money loans are usually considered riskier than other types of business loans. As a result, they tend to have high interest rates and short repayment terms.

» MORE: Compare the best business loans for bad credit

Pros and cons of hard money business loans

Can be used for a variety of purposes. Although hard money loans are often used in real estate projects, like fix and flip loans , they can serve different short-term purposes. You can use a hard money loan for working capital, debt refinancing or consolidation, as well as bridge financing.

Fast access to funds. Some hard money lenders may be able to approve your application within 24 hours and provide funding in as little as one to two business days. Traditional bank loans, on the other hand, can take several weeks or even months to qualify. Banks also tend to require document-heavy applications and may require you to apply in person. Many hard money lenders offer streamlined, online applications with minimal documentation.

Easy to qualify. Hard money business loan requirements are largely based on the value of your collateral. Although lenders may look at your credit score, time in business and business finances, they don’t typically weigh these factors as heavily when underwriting your application. Businesses with bad credit and startups, therefore, may be able to qualify for hard money loans.

Risk level. Hard money loans can be a risky type of financing. Your loan is based largely on the value of the property you use to secure your loan. And if you can’t repay, the lender has the right to seize that collateral.

High interest rates and short repayment terms. Hard money lenders typically charge high interest rates to offset their risk of lending to potentially less-qualified borrowers. These loans also tend to have short repayment terms, anywhere from a few months to a few years. High rates combined with short terms can make these loans more difficult to repay than other financing options.

Down payment. Your lender may ask you to provide a down payment of 10% to 30% (or more) on your hard money loan. Generally, the stronger your credit and financial qualifications, the less of a down payment you’ll need to provide. However, a larger down payment may help you access better rates and terms.

>> MORE: What is a high-risk business loan?

Alternatives to hard money business loans

If you’re thinking about applying for a hard money loan, but you don’t need the funds immediately, you might consider taking a step back and trying to build your credit and cash flow. This way, you’ll improve your qualifications and hopefully be able to get a more competitive loan when you do apply.

On the other hand, if you need funds more quickly, you might look into some other business funding options, such as:

Invoice factoring

Invoice factoring can be a good choice for business-to-business companies with cash tied up in unpaid invoices. Factoring is another type of asset-based financing that can be accessible to borrowers who may not qualify for traditional loan options.

With invoice factoring , you sell your outstanding invoices to a factoring company at a discount. The company pays you a percentage of the invoice upfront and then assumes responsibility for collecting payment from your customers.

Similar to hard money loans, lenders often focus on the value of your invoices and your customer’s payment history when evaluating your application. For this reason, invoice factoring can also be a good option for startup companies and borrowers with bad credit.

» MORE: Best startup business loans for entrepreneurs

Equipment financing

Like hard money loans and invoice factoring, equipment financing is also a type of asset-based financing. With an equipment loan, you can get funding equal to up to 100% of the value of the equipment you’re looking to purchase. You repay the loan over time, with interest, and the equipment you buy serves as collateral.

Equipment financing can be an affordable way to purchase machinery for your business — and it can be easier to qualify for than other business loans. Although equipment lenders will check your personal credit and business finances, they may rely more heavily on the value of the equipment you’re looking to buy.

Short-term loans

Short-term loans offer fast capital that can be used for a variety of purposes. These loans are available from online lenders and typically have terms of up to 18 months. 

Like hard money loans, short-term business loans tend to have flexible qualification requirements — but these loans aren’t so reliant on collateral. You may be able to qualify for a short-term loan with a minimum credit score of 500 and at least six months in business. Many short-term loans don’t require physical collateral at all, and instead are secured by a UCC lien and personal guarantee.

A hard money loan can have a high interest rate and short repayment terms, but it can offer fast cash for borrowers who can’t qualify for other financing options. However, if you can’t repay the loan, your lender can seize your property to recoup its losses.

Based on the state of your business and your financial needs, you’ll need to determine if the potential rewards of a hard money loan outweigh the risks.

Many, but not all, hard money lenders will require a down payment. You may need to provide a down payment of 10% to 30% or more depending on your credit, finances and business history.

Yes. Because lenders rely so heavily on your collateral to evaluate your hard money loan application, they often accept borrowers with bad or fair credit.

On a similar note...

• Starting a Business

Our Top Picks

• Best Small Business Loans
• Best Business Internet Service
• Best Online Payroll Service
• Best Business Phone Systems

Our In-Depth Reviews

• OnPay Payroll Review
• ADP Payroll Review
• Ooma Office Review
• RingCentral Review

Explore More

• Business Solutions
• Entrepreneurship
• Franchising
• Best Accounting Software
• Best Merchant Services Providers
• Best Credit Card Processors
• Best Mobile Credit Card Processors
• Clover Review
• Merchant One Review
• QuickBooks Online Review
• Xero Accounting Review
• Financial Solutions

Human Resources

• Best Human Resources Outsourcing Services
• Best Time and Attendance Software
• Best PEO Services
• Best Business Employee Retirement Plans
• Bambee Review
• Rippling HR Software Review
• TriNet Review
• Gusto Payroll Review
• HR Solutions

Marketing and Sales

• Best Text Message Marketing Services
• Best CRM Software
• Best Email Marketing Services
• Best Website Builders
• Textedly Review
• Salesforce Review
• EZ Texting Review
• Textline Review
• Business Intelligence
• Marketing Solutions
• Marketing Strategy
• Public Relations
• Social Media
• Best GPS Fleet Management Software
• Best POS Systems
• Best Employee Monitoring Software
• Best Document Management Software
• Verizon Connect Fleet GPS Review
• Zoom Review
• Samsara Review
• Zoho CRM Review
• Technology Solutions

Business Basics

• 4 Simple Steps to Valuing Your Small Business
• How to Write a Business Growth Plan
• 12 Business Skills You Need to Master
• How to Start a One-Person Business
• FreshBooks vs. QuickBooks Comparison
• Salesforce CRM vs. Zoho CRM
• RingCentral vs. Zoom Comparison
• 10 Ways to Generate More Sales Leads

What Is a Hard Money Loan?

Table of Contents

Hard money loans are a common financing type in the world of private lenders. This type of funding is considered more flexible than what banks or other traditional lenders offer. Because hard money loans require borrowers to use their assets as collateral, private lenders are often more willing to work with borrowers with bad credit or more modest cash reserves.

Although hard money lending can give you faster access to cash, the process also comes with substantial risks. It’s vital to understand the pros and cons before accepting any money from a private lender.

Editor’s note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs.

What is a hard money loan?

A hard money loan is a type of financing based on the value of some collateral, usually real estate, the borrower offers up. A private lender will offer a loan as a percentage of the asset’s appraised value.

“What a hard money loan does is allow a company or individual to turn a real estate asset to cash, which they could use for any legal business purpose they desire,” said Jon Hornik, chairman of the Private Lender Group. “It’s a way to convert a hard asset into cash.”

A significant benefit of hard money loans is that they don’t require the same underwriting criteria conventional lenders use. Conventional lenders, such as banks, look at the borrower’s credit score, debt-to-income ratio, revenue and other factors when reviewing a loan application. Although private lenders also look at these elements, the collateral’s value is the overriding factor for hard money loans.

“The focus is mainly on the value of the asset,” said Matt Cole, executive managing director at Silver Arch Capital Partners.

How do hard money loans work?

Hard money loans are short-term loans backed by a collateral asset, typically some form of real estate. They are funded by a private investor rather than depositors at a banking institution. The private funding nature of the money provides lenders with more flexibility in deciding which loans to approve or deny.

When applying for a hard money loan, it’s essential to recognize that each private lender might have unique underwriting requirements. Two private lenders might handle a loan application in very different ways. However, a hard money loan generally comes back to the value of the collateral asset. You’ll request a percentage of the value of the collateral asset as a loan, which is known as the loan-to-value ratio.

Generally, lenders charge points (or 1 percent of the loan value each) that are due at the closing of the loan, as well as the principal and its interest. Depending on the loan’s terms, this can become quite expensive. Here’s a breakdown to simplify the process.

• Points: If a lender offers you $100, it might also charge points that are due when the loan closes. In this case, one point is equal to $1. Points essentially act as a fee for the lender above and beyond the interest it will make on the loan. Generally, the more points due at closing, the lower the interest rate, though your private lender may differ.
• Interest: Interest is the cost of money borrowed. You are required to pay interest throughout the life of your loan. When the loan reaches maturity, you will have paid back the principal value plus interest, as well as any points the lender charged. So, if the lender offered you $100 at a rate of 10 percent, you would ultimately pay back $110 when the loan reached maturity. On top of that, if the lender charged you five points due at closing, you also pay back an additional $5.
• Principal: The principal is the amount initially owed. In this example, it is $100. When the loan reaches maturity, you must have paid back the principal amount borrowed along with interest, as well as any points the lender charged.

So what do the terms of a typical hard money loan look like?

“Hard money lenders typically charge between 8 percent and 15 percent interest, which may depend on the credit history and experience of the borrower,” said Melanie Hartmann, owner of Creo Home Buyers. “The borrower’s relationship with the lender may also have an impact on the interest rate. Additionally, hard money lenders typically charge points that can either be paid upfront or added to the principal balance of the loan.”

Most hard money loans carry a 12-month term, but it’s not unheard of to find a two- to five-year term.

Do hard money loans require a down payment?

Some private lenders do require a deposit upon signing. The amount is generally based on the deal’s risk profile, including additional elements of the borrower’s history, such as their business credit score . The deposit could be 5 percent to 25 percent of the total value of the loan.

What should you use a hard money loan for?

Proceeds from a hard money loan can be used to fund any legal business purpose. These are some of the most common purposes.

• When you need to move quickly: If you come across a truly rare opportunity that requires funding immediately, a hard money loan can be a fast way to access cash. 
• Working capital: A common use of hard money loan proceeds is for working capital put toward any number of business needs. This can include expenses such as renovations to the property, construction costs and equipment purchases.
• Bridge loan: If you know your funding will come through in six months, but you need cash in 30 days, you can treat hard money loan proceeds as a bridge loan.
• Debt payoff: Proceeds from a hard money loan can be used to pay off an existing obligation, such as another loan or a mortgage.
• Purchasing raw land: Traditional lenders are not keen to lend on raw land. Hard money loans can be used to purchase empty tracts you can then turn into your desired use.

How do you get a hard money loan?

When seeking a hard money loan, you’ll need to find a nonbank lender; traditional banks and credit unions don’t offer this kind of loan. A hard money loan lender could be a financial institution that isn’t deemed a complete bank or a direct lender specializing in this kind of funding.

Caleb Liu, owner of House Simply Sold, suggests going online to find a hard money lender. “Google is a decent place to start. There are a variety of nationwide hard money lenders. However, you should seek out hard money lenders that are active in your target market.”

Other ways to find hard money lenders include attending networking events, joining real estate investor clubs and asking for referrals. Because this type of loan requires you to pledge your assets as collateral, it’s critical to make sure the lender is legitimate and trustworthy. 

Liu suggests asking these questions:

• What is the lender’s track record? Do you know someone who has closed with them? Are they familiar with and active in the local market? Is the hard money lender licensed?
• How many points will you be charged?
• For your interest rate, how much will you be paying each month? This is important because the rates for hard money loans are usually higher.
• Can the loan be extended if necessary? Are there fees? Will the interest rate increase?
• Are the payments interest-only for the duration of the loan, or will the principal be paid monthly as well?
• What is the maximum loan-to-value ratio? Does this cover only the acquisition, or does it cover the rehab costs as well?
• Is there a prepayment penalty?
• How long is the loan period?
• What happens if you can’t sell the property or come up with the cash before the loan is due? Will your credit score be impacted?
• How quickly can the hard money lender disburse the cash?

What are the pros and cons of hard money loans?

When you’re choosing a business loan , deciding between a bank loan and a hard money loan may come down to practicality factors, your timeline and your precise requirements. While evaluating your options for business lending, the following pros and cons can help steer you in the right direction.

The pros of hard money loans

Hard money loans offer several advantages to businesses in need of capital because they are:

• Faster to close: Traditional lending sources can take months to review and vet an application. A hard money loan can provide a business with much-needed capital quickly, making it an excellent option when time is of the essence. “Cash flow is like oxygen to businesses,” Hornik said. “Without cash flow, you go down pretty quickly. The liquidity provided by private lenders is key in some cases to businesses’ survival.”
• Easier to obtain: Hard money loans are funded without the strict underwriting criteria conventional lenders require, so they’re a business loan you can get with bad credit . This means most businesses can generally get the cash they need more easily and quickly than if they applied through a conventional lender.
• More flexible: Where traditional lenders may greatly detail how you can spend the loan proceeds, hard money lenders don’t have such restrictions. Loan proceeds can be spent on any legal business purpose.

The cons of hard money loans

Though hard money loans can help businesses land funds quickly and easily, they also come with some disadvantages like: 

• Quick maturity: While many loans allow you to pay back over many years, hard money loans require repayment in a much shorter period. “One caution is … hard money loans have short maturity dates of one year or two years,” Cole said. “A lot of times, borrowers look for a loan, close a loan, and don’t realize that the day after they close is when they should be working on how to pay off that loan. There’s no time to waste. The expense of a hard money loan over a three- to four-year period will eat you up.”
• High interest rates: With average rates of 8 percent to 15 percent, you’ll pay much more for your funding. This also means that the longer the loan drags on, the more expensive it can be. “The terms and conditions associated with hard money loans usually entail high interest rates above 10 percent, high closing costs with many points, a draw schedule for completion of various phases of the construction, and oftentimes a prepayment penalty if the loan were to be paid off early,” said David Reischer, a real estate attorney and CEO of LegalAdvice.com.
• Possible restrictions: Since hard money loans are often used for short-term construction or rehabilitation projects, the lender has a vested interest in the “as-improved” value of the property. This means it might push you to meet strict deadlines for any project.
• Stiff penalties if you default: The lender has the right to foreclose on your collateral property and sell it to cover your debt, even if you’ve already completed considerable work on the property. “It is critical that you have a strategy to pay back a hard money loan and then execute that strategy flawlessly,” Hornik said.

When should a business consider a hard money loan?

Since a hard money loan could end up costing you dearly if you can’t repay it within the short maturity window, why would you take one? There are good reasons why businesses take out hard money loans every day, and many successfully pay them back without incident.

Hard money loans and private money lenders typically serve businesses that fall into at least one of these categories:

Can’t get a conventional loan

A conventional lender must abide by strict underwriting requirements. A mediocre credit score or poor debt-to-income ratio can preclude businesses from obtaining a loan. Banks also typically cap the number of loans they’ll give to one individual or business entity. Hard money loans could be a way to secure more funding when you already have multiple conventional loans.

“If you have less-than-stellar credit, then hard money loans are great because the underwriting is based on the asset, not your credit history,” said Shawn Breyer, owner of Breyer Home Buyers. “Banks [also] limit the number of conventional loans that an individual can have at one time. Since hard money loans are not based on the individual, the number of loans is not restricted.”

Private lenders offering hard money loans have more approval flexibility because the money comes from private investors. Businesses that can’t get conventional financing often seek out private lenders instead.

Need funding quickly

Many businesses that could land a conventional loan still go to private lenders because their application processes are much quicker.

“Most of the time with a hard money lender, you talk to a guy who, if he’s not writing the check himself, is a decision-maker for a group of people who are,” Cole said. “It cuts right to the chase.” 

The typical conventional lender’s approval process can take several months. Private lenders often approve funding within a few days.

Want a short-term loan

Hard money financing is useful for construction and rehabilitation projects as well as real estate acquisition. A short-term hard money loan for these purposes lets you use the property as collateral and clear the debt from your books quickly. For businesses that want a short-term or small-dollar loan, hard money loans are more effective than conventional ones.

Advice for businesses accepting a hard money loan

Never accept any loan, especially a hard money loan, without doing your due diligence first. Failure to repay has steep consequences, particularly when your property is on the line. Defaulting on a hard money loan opens you up to foreclosure, so take time to develop a loan repayment plan and stick to it.

Here’s some advice from the experts on accepting a hard money loan.

1. Avoid prepayment penalties.

Steep prepayment penalties basically run counter to the idea of a short-term loan. Make sure to review the loan agreement for any clauses regarding prepayment penalties. If these penalties are excessive, stay away. Better yet, find a hard money loan that doesn’t carry a prepayment penalty at all.

“The most critical thing to look for in a hard money loan is whether there is a severe and egregious prepayment penalty,” Reischer said. “The goal of a hard money loan is to act as short-term financing. As such, if there is a severe prepayment penalty were the loan to be paid off early, then it is usually an attempt by a hard money lender to lock a borrower into a high interest rate for a long period or otherwise suffer a punitive penalty.”

2. Understand the terms of the loan.

You should be clear on the loan’s key elements, including the interest rate, points (a fee of 1 percent of the loan value per point) the lender charges on the loan, and when you can make those payments (upfront or on top of the principal). Always be especially clear on the repayment schedule of the loan to avoid defaulting.

3. Plan multiple repayment options.

The best way to make a hard money loan work for you is to first plan how and when to repay it. Ground that plan in the terms and conditions of the loan agreement. Ensure you have multiple ways to manage the repayment amount if unforeseen circumstances impact one of your strategies.

“Have multiple exit strategies planned before starting the project,” said Cassie Villela, property manager for Silverbridge Realty. “For example, if a flipped home isn’t selling by a certain date, it can be rented out and then refinanced into a conventional loan.”

Hard money loans offer flexible financing at a steep cost

The benefits of a hard money loan are numerous for businesses that can’t get a conventional loan, need capital quickly or want a short-term loan. However, their high cost and short maturity windows could prove problematic for businesses unprepared to repay quickly. Failure to repay the loan could result in foreclosure, even if you’ve performed significant work on the property. 

Hard money loans make sense for businesses that need fast capital or can’t access other types of financing, but preparation and smart financial habits are key to avoiding the major pitfalls of this type of lending.

Always consult an attorney and/or an accountant before accepting a loan. Maintaining relationships with knowledgeable professionals can help you protect your business from costly mistakes that could result in closure. Never sign a loan agreement without the advice of these professionals, and always have a clear-cut plan to pay back any borrowed money.

Alternatives to hard money loans

These alternative loan options can provide quick access to funds but with fewer or different potential drawbacks than with hard money loans.

Equipment financing

If you need equipment for your business and require help covering the cost, equipment financing may be a good option. The equipment you buy serves as collateral and you repay the loan over time with interest. This is an ideal option for a business that is looking to purchase machinery and can be easier to qualify for than a traditional business loan.

>> Learn More: The Ins and Outs of Farm Equipment Loans

Invoice factoring 

A business with a large number of outstanding invoices and in need of immediate funds may want to use an invoice factoring company, which pays you for the invoice and collects payment from your client. For the services, the company will take out any interest or fees, and you will receive the remaining amount. The downside can be hidden fees as a result of working with the company. You can also only participate in invoice factoring if your client’s credit qualifies.

Short-term loans

If you are looking for a loan that does not rely as heavily on collateral, a short-term loan might be right for you. Similar to hard money loans, short-term business loans have flexible requirements, and many do not require you to have any physical collateral. If you have a good credit score and have been in business for at least six months, you may be eligible for this type of loan.

Sean Peek and Stella Morrison contributed to this article. Source interviews were conducted for a previous version of this article.

Get Weekly 5-Minute Business Advice

B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.

Our mission is to help you take your team, your business and your career to the next level. Whether you're here for product recommendations, research or career advice, we're happy you're here!

Hard money business loans: What to know

Advertiser disclosure.

We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.

Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.

How We Make Money

The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.

• Share this article on Facebook Facebook
• Share this article on Twitter Twitter
• Share this article on LinkedIn Linkedin
• Share this article via email Email

• • Life insurance
• • Homeowner’s insurance
• Connect with Mandy Sleight on Twitter Twitter
• Connect with Mandy Sleight on LinkedIn Linkedin
• Get in contact with Mandy Sleight via Email Email

• • Small business loans
• • Funding inequality
• Connect with Emily Maracle on LinkedIn Linkedin

The Bankrate promise

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money .

Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

Bankrate follows a strict editorial policy , so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts , who ensure everything we publish is objective, accurate and trustworthy.

Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money.

Editorial integrity

Bankrate follows a strict editorial policy , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

Key Principles

We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.

Editorial Independence

Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.

How we make money

You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.

Bankrate follows a strict editorial policy , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.

We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.

Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.

New businesses and startups can sometimes struggle to get approved for a business loan — especially if they haven’t established business credit or have bad credit.

Although it’s a risky alternative , a hard money business loan may be an option if you need financing but can’t get it with a traditional or online lender. Understanding how a hard money loan works, the pros and cons and how they compare to other business loans can help you decide if this option is the right choice.

What is a hard money business loan?

A hard money business loan is a secured loan that uses a company’s property or assets as collateral. Hard money business loans usually have high interest rates and short repayment periods, like short-term business loans .

Hard money loans are riskier than business loans since they don’t use traditional factors to determine eligibility and terms, like:

• Time in business
• Business or personal credit
• Annual revenue
• Debt-to-asset-ratio

If you default on hard money small business loans, you could lose the business property you use as collateral . Still, this type of short-term business loan may be an alternative for startups and businesses with bad credit or no credit if they lack other options.

Hard money business loan vs. traditional business loan

A hard money business loan is generally easier to get than a traditional business loan , which may require good credit, years in business and sufficient cash flow to qualify, plus collateral. However, traditional loans typically have longer repayment terms with lower interest rates and fees than hard money loans.

Depending on the loan type , traditional lenders may require a down payment as low as 10 percent or as high as 30 percent. But private hard money lenders may expect 30 percent or more as a down payment.

Traditional, alternative or online lenders finance small business loans . Hard money lenders are typically small organizations, private individuals, businesses or funding groups willing to take on more risk.

How a hard money business loan works

Private lenders and investors are the most common options for hard money lending as the loans mainly rely on the value of property or collateral you use.

Hard money lenders have fewer regulations than traditional lenders, making financing requirements unclear, but often easier to qualify for. Expect loans with high interest rates and short repayment terms to reduce the lender’s risk.

To assess risk, lenders use the loan-to-value ratio of the collateral asset. The ratio is the collateral value compared to the loan amount. While traditional lenders often go as high as a 90 percent loan-to-value ratio for business loans, hard money lenders may only offer up to 75 percent loan-to-value ratio.

Pros and cons of hard money business loans

Alternatives to hard money business loans.

There are alternative small business lending options you might consider besides hard money loans. Consider your financing needs, loan amount, credit and other factors to determine which alternative financing is right for your business:

• Equipment financing/loans : If you need equipment like a vehicle, office furniture, machinery or other assets, equipment financing may be a better option. Equipment loans usually come with additional fees besides interest, so compare your options carefully for the best deal.
• Invoice factoring : If you have outstanding customer invoices, you can sell them to an invoice factoring company for fast funding. Rather than use assets or property as collateral, invoice factoring companies use your customer’s creditworthiness.
• Term loan : A secured business term loan also requires collateral and may offer more favorable terms than a hard money business loan. If you have a good relationship with a bank or lender and show on-time payment history, you may still be eligible, even with bad credit.
• Line of credit : A business line of credit works like a credit card but provides a lump sum of cash. You can draw money for a specified period and only pay interest on the funds you draw. As you pay the money back, the amount you can draw increases.

Other less risky alternatives , like grants, special credit programs, microloans or peer-to-peer lending, may better fit your funding needs. Looking closely at your business’s health, funding needs and repayment abilities can help you find the right business loan.

The bottom line

Hard money lending is an option for startups or businesses with bad credit but have assets or property they can use as collateral. This option is usually riskier than other alternatives, like peer-to-peer lending, since you risk losing your property if you default on payments. If you need fast funding, weigh the costs of hard money business loans compared to other short-term lending options.

Frequently asked questions

What credit score is needed for a hard money loan, what are the requirements for a hard money business loan, why are hard money business loans risky.

Related Articles

How to get a business loan with bad credit

Where can I get a fast business loan?

The best business loans for a 500 credit score

Best small business loans for $100,000 or less

Master The Art of Money: The Untapped Opportunities of Hard Money Brokering

Get your free copy now.

Hard Money University provides several resources to help you learn and address the issues that matter most in your lending business.

CONSULTING 01

Provide your people with the skills to drive performance and transformational growth.

In a consulting or coaching role, we can assist you at every level of your lending organization, whether you need a trusted advisor to top executives or a hands-on consultant for your lending team. Regardless of the role you need, we work side-by-side with you to ensure you realize the transformation you want and can sustain it for years to come.

Besides putting recommendations into practice, we help you develop new skills, drive operational improvements and boost performance throughout your organization. No matter the challenge, you benefit from real-world lending strategies that drive business, while equipping your team to grow and lead.

IN-PERSON BOOTCAMP 02

In-person training for driving sustainable growth in your hard money lending business.

The Hard Money University Bootcamp is for highly motivated individuals who want to level up their lending business. It’s where we share what’s new in the industry, what’s happening next, and how you can unlock the latest strategies to drive growth in your hard money broker business.

If you’re new to the industry, the bootcamp is a perfect place to get started. Because it’s a live immersion event with Rod Stanback, founder of Hard Money University, as well as experts in all areas of hard money lending. Since the format is interactive and action-packed, not only do you learn the whole time, you have many opportunities to make new industry connections.  

Dates for the next Hard Money University Bootcamp will be posted soon. Watch this space for more details.  

HARD MONEY BROKER

Hard money university for brokers.

Up until recently, if you wanted to succeed in real estate investing, you needed several resources.  The most obvious is money. A close second is experience. Of course, a network of industry contacts is helpful too, as is a real estate or mortgage license. 

With Hard Money University for Brokers, you see how you can make a solid living (or even just a steady second income) without having any of these advantages. In fact, for this process to work, all you really need is about $200 a month to cover internet access and a cell phone. 

Some type of customer relationship management software comes in handy too.

This means if you’re already in real estate — whether you’re an investor, agent or mortgage broker — you’re already a step ahead of the game. But even if you’re brand new to the industry, you can still start generating income in as few as 30 days. 

Our hard money broker course is an online mentoring program designed to teach you the skills you need to become a hard money broker. You begin with generating the lead and go all the way until the loan is paid off. You go through every single step of the loan process. You also get all the templates, tools and resources, such as loan analyzers and term sheets.

You essentially get a “brokerage in a box.”

BECOME A MONEY LENDER 04

Hard money university for lenders.

If you have access to adequate cash, you could be making residual real estate without having tenants or even owning property.

We show you how in Hard Money University for Lenders. You learn what it takes to become the direct lender to real estate investors.

You can use your own money, or we give you a step-by-step process for raising money and lending it, as well as partnering with institutions to obtain capital. You see how to do everything from drafting loan documents to creating a complete team to operate your hard money lending business. Now, keep in mind, becoming a hard money lender is riskier than being a broker. Yet you benefit from greater financial rewards. You can actually get paid every month, similar to having rental income. Plus, you maintain more control over funding because you’re the direct money source, which means you can make higher commissions

NOTE: If you’re new to real estate, we require you to start with our hard money broker course. That way you keep your risk low, and you gain a solid feel for how the hard money industry works.

Simple, transparent and honest pricing

Broker partner.

Get paid w/ out the heavy lifting!

• Virtual Academy
• Private Facebook Group
• Deal Support - 3 mo
• 2 Group Coaching Calls

More Support, Bigger Checks!

• Virtual University
• Term Sheet Generator
• Bi-weekly Strategy Calls - 3 mo
• Lender Rolodex & Introduction
• Private Community
• Hands on Group Training
• Marketing Materials
• Deal Support - 6 mo
• Loan Origination System

Broker Elite

More Control, Biggest Checks!

• Bi-weekly Strategy Calls (1-Year)
• Quarterly 1 on 1 Strategy Calls w/ Rod
• Deal Support - 12 mo
• Loan Broker & Deal Pipeline Portal
• Unlimited Email Support

Business in a Box

Your Custom hard money firm setup by our team of experts.

Call for Custom Pricing

• Done For You Setup
• Includes Everything in the Broker and Lender
• Website Design
• Social Media Setup
• Marketing Material
• Team Training

INSTALLMENT PLANS AVAILABLE!

*100% financing options available. apply now w/ no damage to your credit score.

• Testimonials

Home > Finance > Loans

What Is a Hard Money Loan?: Short-Term Financing for Investment Properties

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

A hard money loan is a kind of a short-term business loan that’s designed for real estate investment projects. Of course, there’s a lot more to it than just that. Hard money loans have some specific traits (like high interest rates) that you should understand before you get one.

Luckily, you’re in the right place. We’ll explain how hard money loans work, what makes them different from other loans, and what it takes to get one. We’ll also help you decide whether a hard money loan is right for you and where you should get one if it is.

By signing up I agree to the Terms of Use.

Hard money loans 101

We briefly defined hard money loans above, but let’s unpack that definition a little more.

Hard money loans are a specific type of commercial loan , or a business loan meant for real estate transactions. But unlike other commercial loans, hard money loans are meant for short-term projects, like flipping or rehabbing properties. In some cases, they can also be used for construction.

So while most real estate loans (such as commercial mortgages) come with lengthy repayment terms and low interest rates, hard money loans don’t. In fact, they tend to have very high interest rates and very short loan terms.

For example, you’ll often see commercial mortgages that offer a 5% rate on a 30-year loan. But a typical hard money loan? Think more like 9% interest on a 1-year loan.

Hard money financing goes by a lot of names. You might see a hard money loan referred to as a swing loan, a construction loan, a private money loan, gap financing, or a commercial bridge loan ―among other things.

There are a couple reasons for those higher rates and shorter terms.

First, you’re likely getting a loan on an investment property that a traditional lender wouldn’t touch with a 30-foot pole. In order to get a bank loan for real estate, the property usually needs to be in pretty good condition―in other words, bank loans aren’t ideal for flipping. Since hard money loans get used on less-than-ideal properties, the risk is higher for the lender, and the higher interest rates reflect this.

Second, hard money loans are used primarily for flipping properties. Most borrowers plan to pay off the loan as quickly as possible, either through selling the property or through refinancing with a better loan. As a result, hard money loans have very short terms.

That said, hard money loans have some key advantages. Like we mentioned, you can use them to fund properties that most lenders wouldn’t even consider.

And hard money loans usually have much faster funding turnaround times than conventional loans. A commercial mortgage can take weeks to fund, while a hard money loan can get funded in just days.

Still sound interesting? Then let’s dig deeper into the details of hard money loans.

Hard money loan amounts, terms, rates, and fees

As you can imagine, hard money loan amounts, terms, rates, and fees will vary by lender. And your specific loan details will also depend on your borrower qualifications (which we’ll get to in a minute). But we can give you a general idea of what to expect.

Loan amounts

Hard money loans have to be large enough to buy real estate with (which is why many alternative business loans won’t work). So most hard money lenders offer loan amounts that go into the millions of dollars.

Not all hard money loans are that large, though. Many hard money lenders offer loan amounts under $100,000. That means that hard money loans can work for projects both big and small.

Keep in mind that a lender will consider a few things when deciding how much money to give you. For example, they’ll probably factor in your creditworthiness and your real estate experience.

They’ll also consider the investment property itself. In fact, hard money lenders base their loan amounts on two numbers: LTV and ARV.

LTV, or loan-to-value , has to do with the current value of a property. A lender will offer loans up to a certain percentage of the property’s non-renovated value, which they’ll describe with an LTV percentage. You’ll commonly see anywhere between 70% and 90%.

So say a lender offers loans up to 90% LTV, and you’re looking at a property that’s currently worth $100,000. The largest loan that the lender will give you is $90,000.

ARV, or after repair value , covers how much the property will be worth after it’s flipped. As with LTV, lenders will give you a percentage up to this value. Usually, though, they offer a lower ARV than LTV. We’ve seen ARV ranges between 60% and 80%.

For example, imagine you’re buying a property that’s currently worth $100,000. With some renovations, you think you can increase that to $150,000. A lender that offers up to 70% ARV will give you (at most) $105,000.

Note that some lenders use both of these to figure out loan amounts, while others prefer one or the other.

Repayment terms

We’ve already told you that hard money financing comes with shorter repayment terms than you’d get with conventional financing. But how short is short?

Well, a 12-month term would be pretty standard. But in our research, we saw hard money lenders offer anywhere between 1-month and 36-month terms.

Some lenders offer quite a wide range (like 3 to 36 months), while other lenders keep it simple with one specific term (like 12 months).

Note that hard money loans aren’t fully amortizing. That means that if you simply make your monthly payment as scheduled, you won’t pay off your loan balance at the end of the term―instead, you’ll be left with a large balloon payment. This is deliberate, since lenders expect you to pay off your loan ASAP by selling or refinancing.

Interest rates

Generally speaking, commercial real estate loan rates are lower than the rates on other types of business loans. Hard money loans, though, are an exception.

As we mentioned earlier, hard money loans usually represent a higher risk for the lender. (That’s why you can’t get one from any old traditional lender.) That risk gets passed onto you in the form of higher interest rates.

The lowest starting rate we’ve seen on a hard money loan is about 5.5%, but hard money loan rates starting at 8% or 9% are more common. And remember, those are just starting rates. Your personal interest rate will depend on your creditworthiness and other factors. Put bluntly, you shouldn’t be surprised if you end up paying double-digit interest rates.

It’s easy to confuse APR (annual percentage rate) and interest rates, but APR accounts for both your interest and your fees. Our guide to APR explains more.

Remember, you’ll pay more than just interest. Most business loans have some fees, and hard money loans are no exception.

Expect to pay an origination fee and closing costs (including an appraisal fee, title fees, and other associated fees) on your hard money loan.

One fee to watch out for? A prepayment penalty. Remember, hard money loans are designed to be paid off quickly. Some hard money lenders charge prepayment penalties anyway. So before you get a loan, you should make sure that you understand the costs associated with prepaying.

Is hard money financing right for you?

At this point, you know a lot about hard money loans. But how do you decide if a hard money loan is the best financing solution for you?

First, you should consider how you plan to use your loan. Remember, hard money loans work best for short-term real estate financing needs, like flipping properties (and sometimes construction). They are not a substitute for other types of commercial loans. In other words, you shouldn’t try to get a hard money loan simply because you can’t qualify for a lower-interest real estate loan.

Second, you should have a firm plan in place for your renovation. You don’t want to get a hard money loan and then waste weeks of the already short term trying to figure out how to flip the property.

You should also have a plan for the loan itself. Otherwise, you might get to the end of the loan term and find yourself saddled with a huge balloon payment. So if your plan is to sell the property and use the profits to repay the loan, you should probably make sure the real estate market in your area is healthy. And if you plan to refinance the loan, you should be positive that you can qualify for the best commercial real estate loans .

And of course, before you start applying for hard money loans, you should be reasonably confident that you can qualify to get one in the first place.

Qualifying for a hard money loan

Every hard money lender has its own borrower requirements. They all look at similar factors, though:

• Your personal credit score
• The property’s current value
• The property’s potential value
• Your personal income
• Other liquid assets you have
• Your flipping experience/track record

Again, the specific requirements can vary a lot from lender to lender. But of course, if you have a high credit score, tons of experience flipping properties, and a high personal income, you’ll have an easier time getting approved.

Your personal credit score can help give you a general idea of whether or not you’ll get approved. Most hard money lenders look for a credit score of at least 600, or fair credit. It’s not impossible to get approved with a lower credit score, but you’ll have a much harder time getting approved with bad credit.

We also want to note that almost all hard money lenders require you to have an official business (whether it’s an LLC, corporation, or something else). They don’t lend to individuals.

Where to get a hard money loan

So now you’re sure you want a hard money loan, and you're ready to submit a loan application. What lender should you apply with? As we mentioned above, hard money loans aren’t like other types of commercial loans ―you can’t get a hard money loan from any old institutional lender.

Instead, you’ll need to look for either a private lender or a specialized hard money lending company. These lenders often offer financing in only some states, so you might have to do some digging to find a hard money lender that offers a loan program in your area.

That said, we’ve rounded up some of our favorite hard money lenders.

Data as of 6/29/22. Offers and availability may vary by location and are subject to change.

You can learn more about these lending companies (and some others) in our rankings of the best hard money lenders .

The takeaway

A hard money loan can work well for short-term real estate projects. It lets you fund rehab and construction projects that you could never get a traditional loan for (and it lets you get funding faster too).

Just remember that you should expect a higher interest rate and a shorter loan term that you'd get with traditional financing. So before you submit your loan application, make sure you've got a plan in place for repaying the loan―whether that's by selling the property or refinancing.

Plan to refinance your hard money loan? Make sure you’re ready by learning how to refinance business loans .

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

5202 W Douglas Corrigan Way Salt Lake City, UT 84116

Accounting & Payroll

Point of Sale

Payment Processing

Inventory Management

Human Resources

Other Services

Best Small Business Loans

Best Inventory Management Software

Best Small Business Accounting Software

Best Payroll Software

Best Mobile Credit Card Readers

Best POS Systems

Best Tax Software

Stay updated on the latest products and services anytime anywhere.

By signing up, you agree to our Terms of Use  and  Privacy Policy .

Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.

Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our  Privacy Policy Page . |

© Business.org 2024 All Rights Reserved.

BizFundingResource.com

Hard Money Broker Business Plan and SWOT Analysis

Hard Money Broker Business Plan, Marketing Plan, How To Guide, and Funding Directory

The Hard Money Broker Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start a Hard Money Broker business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

Your Business Planning Package will be immediately emailed to you after you make your purchase.

Product Specifications (please see images below):

• Bank/Investor Ready!
• Complete Industry Research
• 3 Year Excel Financial Model
• Business Plan (26 to 30 pages)
• Loan Amortization and ROI Tools
• Three SWOT Analysis Templates
• Easy to Use Instructions
• All Documents Delivered in Word, Excel, and PDF Format
• Meets SBA Requirements

Hard money brokers play an important role as a relates to securing capital specific for real estate projects. Unlike direct hard money lenders, hard money brokers operating capacity by sourcing funds on behalf of investors and placing them with real estate entrepreneurs that have economically viable projects. Like all hard money focused debt instruments – the terms of these loans are typically considered to be intermediate. Usually, a hard money loan last anywhere from six on the terms of the mortgage. In almost all instances, there are substantial fees associated with sourcing a hard money loan on behalf of a real estate entrepreneur given the complexity of these types of financing deals. Usually, a commission of 4% to 6% is provided to the hard money broker in exchange for sourcing the funds from appropriate investors. The interest rates on hard money can vary substantially but usually there in the 8% to 15% range. As such, these loans are truly only appropriate for highly qualified real as the entrepreneurs that can quickly acquire property, fix it up, and then sell it to the general public. This is why these loans are considered to be short-term only or the entrepreneur will typically seek to acquire a traditional mortgage in order to refinance their hard money loan.

Hard money brokers operate in a very specific space by having a number of investors on standby that are willing to provide capital for economically viable real estate projects. It should be noted that the barriers to entry for a new hard money brokerage business is considered to be moderately low. Dual and the business must be licensed as a mortgage brokerage in order to source this very specific type of financing. Given the complexities of mortgage laws, a properly qualified real estate attorney that has an understanding of mortgage financing laws should be retained in order to make sure that the hard money brokerage firm is operating within the letter of the law at all times. In some cases, a hard money broker may be able to avoid certain licensing procedures provided that they operate specific for similar operating activities. Only a qualified attorney can make the appropriate determination as to what licenses would be appropriate and are applicable to a hard money brokerage business. The startup cost associated with this type of company typically range anywhere from $10,000 to $50,000 depending on the immediate size and scope of the business.

A hard money broker business plan should be developed if the entrepreneur is seeking capital from a private funding source in order to commence operations. It should be immediately noted that most financial institutions are not willing to provide a loan to a hard money brokerage given that they are considered to be a financial business. However, if the entrepreneur has a significant amount of tangible assets that can be used as collateral than they may qualify for a working capital line of credit secured by these existing assets. Of course, a business plan is going to be required and this document should feature a three year profit and loss statement, cash flow analysis, balance sheet, three shoes page, as well as the industry information specific for the hard money industry. As it relates to industry information is an independent hard money brokers operate within the United States. Each year, these businesses generate an aggregate of about $40 billion in fees not only from closing costs but from interest as well. This industry is expected to grow in lockstep with the economy as a whole and with the real estate market. During times of economic recession, hard money lenders are generally able to remain profitable and cash flow positive given the fact that they are able to provide a significant amount of short-term capital for still economically viable real estate deals.

Frequently developed in conjunction with the business plan, is the hard money broker SWOT analysis. As a relates to strengths, the barriers to entry for a hard money broker business are low, the startup costs are low, and the fees can be substantial for a highly seasoned professional that has an understanding of this short-term lending business. These businesses, again, are generally able to always remain profitable given their low operating cost and high fees associated the placement of mortgage funds.

For weaknesses, the deals that are done in regards to using hard money are usually far and few between. Most highly seasoned real estate entrepreneurs and investors are generally qualified to obtain traditional financing such as a real estate backed line of credit or a mortgage. As such, the unique need for hard money usually only occurs when there is a very specific time frame in which a loan is needed and traditional financing takes too long. Additionally, there are a myriad of laws that must be adhered to as relates to sourcing funds for private hard money investor and providing them to a real as the entrepreneur. Again, it is imperative that an attorney is retained by the firm in order to make sure that each deal falls within the letter of the law and does not violate any real estate settlement procedures.

The opportunities afforded to a hard money broker are substantial. The way that these businesses grow is typically by sourcing additional investors that are willing to put up additional capital for hard money projects. Additionally, many hard money brokers will maintain ongoing relationships with real estate entrepreneurs that frequently need this type of financing in order to complete their real estate projects and engage in similar business activities. In some cases, the hard money broker may actually use some of their own funds to generate income from direct closing costs as well as interest fees after they establish a substantial client base.

As it relates to threats, there’s really nothing that would impact the way that these companies do business at this time. However, with the advent of the Internet and rapidly changing legislation as it relates to mortgage financing – there may be some additional regulatory frameworks that may need to be addressed as a hard money broker expands their business operations. A real estate bubble or economic recession could also impact the way these companies do business given that there would be fewer available projects that will require hard money.

A hard money broker marketing plan should be developed so that potential investors as well as potential borrowers can be sourced very quickly. One of the ways these businesses frequently source their investors and borrowers is to the use of the Internet. These days it’s imperative that any lending business maintains an expansive portal that showcases the loans available to customers as well as the programs that are available for investors who want to earn above rate market returns on their capital. Again, one of things that need to be addressed when developing a proprietary website for a hard money broker is that all laws regarding lending must be addressed and disclosed on the website. An attorney that has an understanding of and all marketing with. Many hard money brokers also maintain profiles on popular social media networks such as LinkedIn, FaceBook, Google+, and twitter. These relationships can assist a hard money broker with obtaining the very valuable leads among real estate borrowers that are looking to complete projects.

Owning and operating a hard money brokerage business can be extremely rewarding not only professionally but from a financial standpoint as well. They provide a very important service to the general public give so financing terms allow individual real estate investors as well as developers to complete profitable projects without having to go through the extensive process traditional mortgage loan. The demand for this type of borrowing is not expected to wane anytime soon, and the demand for these services will always be strong in any economic climate.

• Scroll to top

• Get Started

Money Lending Business Strategy Example + Ideas

• Author Content Team
• Published February 21, 2024

Starting a money lending business can be a profitable endeavor if done right. With proper planning and strategy, you can build a sustainable lending business that provides value to customers while generating steady revenue.

Here is an overview of key things to consider when developing a money lending strategy :

• Understand legal/regulatory requirements in your area
• Determine what types of loans to offer (personal, business, etc)
• Decide on loan terms/structure (durations, interest rates, fees)
• Build lending criteria and risk models
• Source funding capital to provide loans
• Market services and acquire customers
• Leverage software to automate and scale operations

Crafting an effective strategy lays the foundation for a thriving lending operation.

Developing Lending Criteria and Risk Models

One of the most critical components of a money lending strategy is developing clear lending criteria and risk models to guide decision-making. Lending criteria refers to the standards and factors lenders use to determine borrower eligibility, loan sizes, rates, and terms. Risk models help assess the likelihood loans will default.

Here are key steps to establish strong lending criteria and risk models:

Research borrowing demand and risk profiles

• Conduct market research to understand needs of target borrower segments
• Gather data on default rates for similar loans
• Identify common attributes of high-risk applicants

Create loan application scoring system

• Determine key metrics to assess during applications
• Assign weighted scores to these metrics
• Metrics may include income, credit score, collateral, payment history, etc
• Set minimum score thresholds for loan approval

Establish tiered approval bands

• Segment applicants by risk level into approval bands
• Each band has standardized loan terms and rates
• Low risk: Up to $10,000, 8% APR, 36-month term
• Moderate risk: Up to $5,000, 12% APR, 24-month term
• High risk: Up to $2,000, 15% APR, 12-month term

Integrate risk model projections

• Risk models estimate chance of delinquency/default
• Plug model outputs into lending criteria rules
• Ensures consistent risk-based decision making

Revisiting and refining criteria and models improves outcomes over time.

Determining Capital Requirements and Securing Funding

Access to capital is the fuel that powers any lending business. Determining how much money you need, and securing funding sources to meet capital requirements, is an essential strategic move.

Here is a strategic approach to capital planning for a money lending operation:

Estimate minimum capital needed

• Project average loan size and loan loss rate
• Multiply average loan size by number of borrowers planned per month
• Add proposed maximum outstanding principal
• Factor in assumed bad debt rate
• Result approximates minimum capital required

For example:

• Average loan size: $5,000
• Monthly borrowers: 20
• Max. outstanding principal: $500,000
• Assumed loss rate: 5%
• *Minimum capital = (20 * $5,000) + $500,000 + $25,000 = $525,000*

Evaluate funding options

You can fund loans from a few sources, each with pros and cons:

Secure commitments

Based on funding needs and options:

• Get commitments from those providing capital
• Formalize agreements with clear repayment terms
• Ensure reliable access to capital before making loans

The more certainty around capital, the easier it is to plan operations.

Acquiring Customers and Marketing Services

To generate loan volume and revenue, a robust strategy for customer acquisition and marketing is vital for any lending operation.

Several proven channels can attract prospective borrowers:

Digital marketing

• Useful for reaching web-savvy applicants
• SEO to drive organic traffic from search engines
• Pay-per-click ads placed through Google, Facebook, etc.
• Targeted display ads on finance-related websites
• Retargeting ads to website visitors
• Provides trackable results

Print/broadcast promotions

• Leverages traditional media
• Newspaper, magazine, radio, TV ads
• Billboards located in high-traffic areas
• Direct mail campaigns to targeted consumer lists
• Harder to quantify effectiveness

Strategic partnerships

• Develop referral relationships with entities serving prospective borrowers
• Real estate agencies
• Small business associations
• Accounting/tax advisory firms
• Could structure revenue share agreements on loans referred

Networking/word-of-mouth

• Communicate offering at conventions, seminars, other events
• Motivate happy customers to organically refer others
• Low/no cost with trust benefits

An optimal strategy likely utilizes a mix of these options, with budgets allocated across channels based on observed conversion rates. Testing and optimization allows for resources to be shifted toward highest-performing channels over time.

Leveraging Software and Technology

Technology integration is key for scaling a money lending business while controlling costs. The right software makes operations more productive and efficient.

Here are some solutions worth incorporating into tech strategy:

Loan management software

Mission-critical systems that handle key workflows:

• Borrower portal – Receive and manage applications
• Document collection/e-signing – Securely collect signed agreements
• Underwriting automation – Score applications, render credit decisions
• Loan servicing – Payment tracking, late notices, collections
• Reporting/business intelligence – Portfolio analytics, risk insights

Top systems provide: workflow configurability, rules-based decisioning, document generation, data integration, portability.

Accounting software

Tracks financials, supports tax/regulatory compliance:

• Manage accounts receivable, payable
• Process electronic payments
• Reconcile transactions
• Structure financial reporting

QuickBooks, Xero, NetSuite are popular platforms.

Risk analysis software

Specialized programs bolster risk management:

• Predict loan performance /credit risks
• Track portfolio health metrics
• Model scenarios to stress test operations
• Guide risk-based decisions on capital allocation

Integrating outputs into underwriting systems closes loop.

CRM platform

Centralizes borrower data and interactions:

• Unified client database
• Email/SMS capabilities
• Task assignment, activity logging
• Reporting on engagement metrics

Salesforce, HubSpot, Zoho typical options.

Prioritizing solutions that easily integrate while meeting specialized needs allows for a scalable, optimized tech stack tailored to lending operations.

Providing Ongoing Value as a Sustainable Business

Launching a money lending operation is one thing – building it into a sustainable business over the long haul requires continually delivering value. Here are some strategic priorities that serve borrowers while fueling lasting success:

Maintain stringent risk management

While lending higher volumes generates more revenue, uncontrolled risk exposure threatens long-term viability. Strategy involves:

• Enforcing rigorous underwriting standards
• Securing diversified capital sources
• Testing portfolio performance under stress
• Modifying risk limits based on data

Balancing growth with prudent standards provides reliability.

Explore expanded product offerings

Start with a niche, then expand responsibly into other lending areas once established. Potential options:

Broadening into adjacent spaces serves more financial needs.

Provide a consultative borrowing experience

Rather than quick, transactional funding, aim to build relationships with borrowers – understanding their circumstances to structure mutually beneficial loan packages. Tactics involve:

• Needs assessments during underwriting
• Ongoing guidance around responsible borrowing
• Proactive refinancing when advantageous

This level of consultative service earns trust and loyalty.

The most sustainable model adapts over time – taking cues from borrowers while innovating around new opportunities that further strategic goals. Commitment to continual improvement cements longevity.

What are the 5 C’s of lending?

The 5 C’s of lending are a framework used by lenders to determine the creditworthiness of potential borrowers. Here’s a breakdown of each:

1. Character

• Lenders assess your credit history and reputation for repaying debts on time. Your credit score reflects this.

2. Capacity

• Lenders want to know if you have the ability to repay the loan. They’ll examine your income, debt-to-income ratio (DTI), and overall financial situation.
• This refers to the amount of money you’re putting down (down payment) as well as any other assets. Lenders like to see that the borrower has some “skin in the game” and is invested in the transaction.

4. Collateral

• Assets that can be pledged to secure the loan. In the event of default, the lender can seize the collateral to recoup losses.

5. Conditions

• The purpose of the loan and how the money will be used. Lenders also consider prevailing economic conditions that could affect your ability to repay or the value of any collateral.

Why are the 5 C’s important?

The 5 C’s offer lenders a systematic way to evaluate the risk of lending money. By carefully examining these factors, lenders can make more informed decisions, leading to:

• Reduced risk of defaults: The 5 C’s help minimize the chance of lending money to borrowers who won’t be able to pay it back.
• Fair interest rates: Borrowers with a strong profile across the 5 C’s can often secure lower interest rates.
• Responsible lending: Considering the 5 C’s promotes responsible and ethical lending practices.

"); display: inline-block; height: 24px; width: 24px; color: rgb(32, 33, 36); font-family: arial, sans-serif; font-size: medium; font-weight: 400; white-space-collapse: collapse;”>

Key takeaways.

• Conduct extensive research when developing lending criteria and risk models to guide decisions
• Estimate capital requirements based on projected loan volume and losses, secure commitments
• Employ diverse marketing tactics for customer acquisition, measure effectiveness
• Leverage specialized software to scale operations efficiently
• Expand products judiciously while providing consultative borrowing guidance
• Manage risk exposure stringently to ensure long-term sustainability

Recent Posts

• Posted by Content Team

Microfinance Mastery: Crafting a Winning Business Plan in India

Microfinance Bank Business Model Explained

How Create A Strategic Blueprint for Microfinance Success

This website stores cookies on your computer. Cookie Policy

• Share full article

For more audio journalism and storytelling, download New York Times Audio , a new iOS app available for news subscribers.

• May 13, 2024   •   27:46 How Biden Adopted Trump’s Trade War With China
• May 10, 2024   •   27:42 Stormy Daniels Takes the Stand
• May 9, 2024   •   34:42 One Strongman, One Billion Voters, and the Future of India
• May 8, 2024   •   28:28 A Plan to Remake the Middle East
• May 7, 2024   •   27:43 How Changing Ocean Temperatures Could Upend Life on Earth
• May 6, 2024   •   29:23 R.F.K. Jr.’s Battle to Get on the Ballot
• May 3, 2024   •   25:33 The Protesters and the President
• May 2, 2024   •   29:13 Biden Loosens Up on Weed
• May 1, 2024   •   35:16 The New Abortion Fight Before the Supreme Court
• April 30, 2024   •   27:40 The Secret Push That Could Ban TikTok
• April 29, 2024   •   47:53 Trump 2.0: What a Second Trump Presidency Would Bring
• April 26, 2024   •   21:50 Harvey Weinstein Conviction Thrown Out

Stormy Daniels Takes the Stand

The porn star testified for eight hours at donald trump’s hush-money trial. this is how it went..

Hosted by Michael Barbaro

Featuring Jonah E. Bromwich

Produced by Olivia Natt and Michael Simon Johnson

Edited by Lexie Diao

With Paige Cowett

Original music by Will Reid and Marion Lozano

Engineered by Alyssa Moxley

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music | YouTube

This episode contains descriptions of an alleged sexual liaison.

What happened when Stormy Daniels took the stand for eight hours in the first criminal trial of former President Donald J. Trump?

Jonah Bromwich, one of the lead reporters covering the trial for The Times, was in the room.

On today’s episode

Jonah E. Bromwich , who covers criminal justice in New York for The New York Times.

Background reading

In a second day of cross-examination, Stormy Daniels resisted the implication she had tried to shake down Donald J. Trump by selling her story of a sexual liaison.

Here are six takeaways from Ms. Daniels’s earlier testimony.

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Jonah E. Bromwich covers criminal justice in New York, with a focus on the Manhattan district attorney’s office and state criminal courts in Manhattan. More about Jonah E. Bromwich

Advertisement