Hard money loans are loans for the purchase of real estate and other fixed assets coming from private investors. These loans are available to newer businesses and business owners with lower credit scores, but there are some catches.
The biggest downside is that hard money lenders typically require down payments. That means other sources of financing or draw from your own funds. Because of that, not all small businesses are able to qualify for a hard money loan.
Hard money loans typically have higher interest rates because it caters to businesses with subprime credit. If your business or you as the owner have excellent credit, you might want to rather consider a bank term loan. Interest rates on hard money loans range from about 10% to 20%, and the loans are for a very short term. After the term expires, most small business owners find that they have to refinance into another loan.