Hard Money vs. Traditional Lending — What Makes Reprop Unique


Different commercial real estate borrowers have different needs, and not all traditional bank loans can immediately provide funds for a variety of situations — that is where hard money lending comes in. Also called private money lending, the loan is judged by the real estate collateral and the borrower’s credit profile is generally not a factor. At Reprop Financial, we do hard money lending a little differently.


Instead of a typical hard money loan, Reprop Financial offers a hybrid of private and traditional loan reviews to offer clients the lowest rate possible. We blend a credit review into the approval process instead of just looking at the collateral by considering aspects of the borrower’s credit overview, which includes factors like credit worthiness and income. The difference between our hybrid private money loan and a traditional loan is we put more weight on the collateral, while traditional bank loans put more weight on creditworthiness.


With a better assessment of the risk involved, we are able to offer a lower interest rate for private money lending — instead of being 4 to 5 percent higher than a traditional bank loan’s interest, our private money loans are typically only 1 to 2 percent higher.


This blend of credit and collateral overview allows us to find the story behind the need for the loan and to offer the best solution possible. For example, sometimes the collateral is difficult for the bank to get its arms around, such as a single-use facility like a performing arts center which is a perfect candidate for a hard money loan.


Reprop Financial is unique not only in the hybrid hard money approach, but also in the types of loans we can offer. Private or hard money lending has be exclusive to “bridge-lending” which get a borrower from where they are now to where they need to be, whether that destination is to obtain a traditional loan in the future, get to a position sell a property or another need that is short term. However, not all needs are short term, and that’s where ReProp’s approach differs from other private lenders since we also offer fully amortized, long-term loan solutions that will result in fewer fees for the borrower when compared to obtaining several short-term loans. We scorn the notion that one loan product fits all because each borrower’s situation is unique and therefore we believe we must tailor the loan to the borrower’s needs whether short term, long term amortizing or interest only or a hybrid.


Our greatest satisfaction in bridge-lending is when our borrowers reach point B and they say goodbye to us. We recently helped a client obtain a conventional loan with SBA financing after three year owner build out of a winery, restaurant and other uses, and that is exactly the type of solution we want to provide.


For more information on our hard money lending solutions, call 707-444-7711 for a quick response from our Eureka CA lending office.

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