Franchise Financing

Hard Money Business Loans: Top Options for 2022

A hard money business loan allows you to access asset-based funding once you have exhausted alternative options. This guide outlines the top hard money lenders.

Financially Reviewed by Somer G. Anderson Finance Professor, on 6.1.2021

Hard money business loans are not solely based on the applicant's creditworthiness. Typically, businesses will select this type of financing as a last resort when traditional loans are unattainable or too costly due to bad credit or a high loan-to-value ratio. Traditional banks do not offer hard money loans because it is not regulated by the Federal Reserve, making these transactions risky. 

What is a Hard Money Business Loan?

A hard money loan is one of the riskier types of business loans. Interest rates are typically based on credit scores, starting at 8% and then increasing substantially for lower credit scores. Typically with hard money funding options, property or commercial real estate are offered as collateral to mitigate borrower default. A lender will determine the viability of financing your venture by calculating a loan to value ratio, determining the value of any collateral, and evaluating your risk profile. Despite this financing vehicle being unregulated, it does come with a few surprising benefits. Interest rates can often be between 9% and 21% and processing time can be swift, making hard money loans ideal for emergencies.

Recommended Reading: Best Commercial Real Estate Loans

How Do Hard Money Loans Work? 

A hard money loan is a high-risk asset-based loan. Thus, these types of loans are entirely backed by the value of an asset, typically the land or property of the business owner. This means that the land or property is used as collateral, and provides the lender with a means of security. If you are unable to pay back your loan the lender will take your property to account for their loss in funds. This is what makes this loan type so risky.

Hard money loans are typically used by businesses that are unable to meet the application criteria of other loan types. Entrepreneurs in search of such loans typically turn to hard money lenders for business. It’s worthwhile mentioning, however, that hard money loans are not exclusively for businesses, as consumers can also apply for this type of loan. 

Businesses can use the money from hard money loans to finance projects and operations. Yet, hard money loans, should generally only be used in emergency situations, because they incur high interest rates. These loan types also generally demand fast repayment, which can make it hard to return the money loaned.  

There are various hard money lenders for business. Such sources include private individuals, alternative lenders, and private funding groups. 

Who Regulates Hard Money Lenders?

Regulators include, for example, the Office of the Comptroller of the Currency, the Federal Reserve, and traditional mortgage lenders and other regulated banks. These sorts of regulators must adhere to federal regulations and rules when they lend money to businesses and private clients.  

Hard money loans are generally distributed by individuals, unregulated private lenders and small business hard money lenders. Although such lenders don’t have the same compliance regulations as banks, you will still need to sign a contract that will have legal implications. Hard money loans have shorter terms in comparison to conventional property loan options. These timeframes generally run from a few months to a couple of years. 

Hard money loans have higher risk and higher interest rates than typically small business loans and conventional mortgages. Private lenders generally charge between 12% - 45% in interest or even more. This can vary according to your risk profile and other elements. 

Recommended Reading: Best Small Business Line of Credit Lenders in 2022

How to Qualify for a Hard Money Loan  

Hard money lenders for business do not look at the creditworthiness of the borrower. Rather, they consider the collateral that a business owner can provide the lender. In this way, your credit score is not typically taken into account. Instead, the collateral you have and you can offer is taken into consideration when you come to apply for a hard money loan. 

In most cases, the whole value of your collateral is not relied on. Rather, the lender calculates a loan to value ratio. The loan to value ratio is calculated as a percentage of the value that is offered up as collateral. If the collateral your business provides to the small business hard money lenders is not sufficient to secure a hard money loan, you can also choose to provide personal assets.   

Hard Money Loan Rates

As the banks are averse to this borrowing structure, there is space for individuals and online finance houses to fund projects that carry potentially high returns with little startup funding. For example, budding property developers looking to invest in a home-upgrade project would fall into this category. 

The business loan application process has a loan-to-value and interest rate factor. These two points determine the terms and rates for the funding. Assets are weighed against the investment required, and an LTV figure is calculated. The repayment period is factored in, which can range from 1 - 12 months, and within a week - a deal may be structured for you.

Recommended Reading: Best Microloans for Small Businesses

Hard Money Loan Pros and Cons

Hard Money Loan Pros:

  • Speedy application process - the entire process is generally completed quickly as the lender does not need to perform multiple credit-worthy checks.

  • Existing client approvals - These approval timeframes can be cut further if you have an existing relationship with the lender.
  • Credit rating - Adverse credit scores will not disqualify you from a successful application.   
  • Potentially favorable interest rate - Theoretically, you would be able to attract a rate that is within the region of bank-based loans.  

Hard money loan cons:

  • Increased risk profile - This type of assistance also attracts higher rates of return for lenders.  
  • Additional fees - These interest rates exclude origination and administration fees. 
  • Down payments may be required - It is common-place to put down a deposit or down payment to initiate the advance.  

Top Alternatives to Hard Money Business Loans

Generally business should only approach hard money lenders for business loans as a last resort. Due to the major disadvantages linked to hard money business loans and hard money line of credit, you should exhaust all other loan options before looking into a hard money loan. There are many less-risky financing options out there that are well worth looking into.  

If you are searching for a hard money loan because you believe you won’t be able to qualify for other business loan types, you could look more deeply into the following loan options. These loan types tend to have more flexible loan requirements that could work in favor of your business. 

1. Invoice Financing

Are you a B2B business that relies on invoicing your customers for your service? If yes, it is worthwhile looking at the option of invoice financing. 

Invoice financing will let you gain access to finances by offering your outstanding invoices up as a type of collateral. So, if you need funding because the cash flow of your business is linked to unpaid invoices, then invoice financing is a top option. In this way, your invoices secure the funding you receive from your loan. 

Another thing that makes invoice financing attractive is that it is simple to apply for and qualify for. This is because a lot of lenders will assess the repayment history of your customers rather than the qualification of your business. In addition, with the majority of online lenders, you can get invoice financing relatively fast. What’s more invoice financing is by and large more affordable than hard money business loans.

2. Equipment Financing 

Equipment financing is another means of securing financing for your business without having to offer up assets. As with invoice financing, equipment financing secures itself - so to speak. It is a loan that entrepreneurs can use to buy equipment. The equipment the business owner purchases will be used as the collateral for the loan obtained. 

Hence, as opposed to hard money business loans, with equipment financing you won’t need to provide an external asset as collateral. In addition, as the equipment will work to minimize the risk, equipment financing lenders are typically able to provide you with a larger amount of money, lower interest rates and longer repayment periods. 

3. Short-Term Loans 

If you are thinking about approaching small business hard money lenders for a hard money loan because you believe you won’t be able to receive another loan type you could want to think about unsecured business funding options.

Short-term loans, for example, don’t demand physical collateral and are also more or less available to many types of business owners. In addition, short-term loans can be used for many different business usages, which makes them different to equipment and invoice financing loans. Short-term loans also have varying loan amounts, interest rates, and repayment terms. 

As such, prior to choosing a hard money business loan, you may want to seriously consider short-term loans to decide if a short-term loan is a good option for your business. 

The Best Hard Money Business Lenders - Full Overview

1. Lendio - Quick Funding Options

Lendio was established in 2011, and has developed extensively since then. To date, they claim to have provided funds for 216,000 small business loans worth over $10 billion dollars. Lendio is a loan marketplace, so it doesn’t lend you funds directly, rather it lets you compare loan offers with over 75 lenders in the small business area. 



  • Compare loan offers from over 75 lenders
  • Funding in just 24 hours
  • Small business loans, business lines of credit, and  SBA loans available
  • Lendio doesn’t lend money directly
  • Eligibility requirements differ according to the lender

Lendio Features

In relation to its small business loan offerings, Lendio allows you to borrow from $5,000 - $2 million according to your business needs. You can repay your loan over a period of 1 - 5 years, and interest rates start at just 6%. The application process only takes 15-minutes, and you can receive a decision from Lendio within the same business day. 

Final thoughts 

Lendio is a top loan comparison site as it lets you compare loans from over 75 lenders in all in the same place. You can also receive funding for your business in just 24 hours, which is great for business owners who require cash quickly. 

2. Fundera - Best for Variety of Options

Funders is another online marketplace that provides you with the opportunity to find the right lender for your business. You can select the type of loan and the amount you require, and then the software connects you with a suitable lender. Following this, you can contact a lending specialist who will outline your options. 



  • Fundera’s services are free to use
  • Fundera doesn’t get incentives to work with certain lenders
  • Access to 30+ lenders with one application
  • Wide variety of top products
  • You’ll work with a lending specialist to help you assess your options
  • You won’t know your APR on certain loan products until you have applied
  • Limited information about why you don’t qualify for some loan products
  • Fees and interest rates on certain loan products might be high


In a short time, Fundera has been able to assist more than 35,000 businesses with their financial security by providing more than $1 billion worth of loans. Appreciating which sort of financing could fit your business can be confusing, so it’s great that Fundera matches business owners with a loan specialist - to help you discover which options are best for you and your business. 

Final thoughts 

Fundera provides a multitude of lending and funding options for businesses that require access to money. With a broad network of lending partners and 9+ options for loans and financing this no-fee platform is a suitable option for business owners who want individual attention without needing to hire an expert. 

3. BlueVine - Best for Invoice Factoring 

BlueVine, is an online lending service that was established in 2013. BlueVine provides services that aim to help merchants overcome cash flow issues. Specifically, BlueVine provides invoice factoring - a sort of business financing for B2B (business to business) where unpaid invoices are sold at a reduced cost. If your business doesn’t process invoices, BlueVine also provides conventional lines of credit.



  • Fast approval process
  • Minimum 530 FICO score to be eligible
  • PPP loan forgiveness application offered for loans originated in 2020
  • Only offered for B2B companies
  • Minimum $10,000 in monthly revenue to apply for invoice factoring
  • No financing for auto dealerships, medical marihuana businesses, or donation-based non-profits


BlueVine is a financial technology company that provides small businesses with business loans, business checking, and invoice factoring, Their highly competitive invoice factoring services assists businesses with their cash flow difficulties, helping them get greater credit limits by offering 85-90% of the cash upfront. 

BlueVine provides as much as 5 million for invoice factoring with an interest rate of 0.25% per week. Qualifications include530 FICO score $10,00 in monthly revenue, three months or more in business, and your business has to be B2B. 

 Final thoughts

BlueVine gives small-business owners various loan options to deal with short-term financing needs. BlueVine’s invoice factoring or business line of credit might be suitable for your business if you need cash fast, have B2B customers, and don't meet the credit requirements set by other lenders.   

4. GoKapital - Best for Financing for High-risk Industries

GoKapital is a real estate loan broker with alternative loan products for entrepreneurs. It provides bridge loans, hard money loans, commercial mortgages with terms of up to 30 years. It also has cashout refinancing, rental investment property loans, ground-up construction, foreign national financing, and more. 



  • Faster closing - they can close a loan in 2 - 4 weeks
  • Low rates starting from 7% with no upfront costs and min documentation
  • Up to 90% LTV- you can get up to 100% of renovations const and 75% of the purchase price
  • Your loan may not be funded by GoKapital directly
  • Pricing and terms aren’t always transparent 
  • You may be routed towards another sort of financing


GoKapital has a few ways of creating loans for customers. The initial way is to connect borrowers with private lenders - like a marketplace. GoKapital also provides funding for loans in-house, and in this way functions as a direct lender. In certain instances, a combination of the two could be used whereby GoKapital funds part of the loan and a different private lender funds the other part.

Final thoughts 

GoKapital provides business owners with alternative working capital solutions through its different funding opportunities for business loans. Its application process is simple and expedited. 

The Top Hard Money Lenders for Small Businesses - Summarized

Our experts have researched and compiled a table of the top hard money lenders.   


Max/Min Loan

Loan Rates

Special Requirements

Get a loan


Lendio review

$2.5K - $500K

Interest from 8%

Existing business

Apply Now


Fundera review

Up to $250K

Start at 10%

Typically between 3 - 18 months

Apply Now


BlueVine review

$5K - $5M

Dependent on underwriting

Six months in business; min. $50K\annum revenue; 

Apply Now


GoKapital review

$10,000- $500,000


Minimum of $10,000 average monthly revenue. At least four months of business bank account statements.

Apply Now

See Our Additional Guides on Business Loan Types

Final Thoughts

As a business owner, obtaining a small business loan conjures up images of endless paperwork and unending red-tape. The mere thought of the application process can be daunting. A hard money loan borrowing structure is a viable one when you select the lender that best suits you from our top hard money loan table - carefully compiled by our industry experts.