Hard money loans are generally lesser in amount and short term. The simple reason behind this is that the lenders are themselves at a colossal risk when they lend money to strangers without strong credit scores. This means that collaterals that are offered to the hard money lenders need to be sufficiently priced to cover for their losses over time in case of a default from the debt holder. Real estate property is often the most common collateral that is offered in return for such hard money loans.
Legally, there are severe and stringent laws overseeing the practice of hard money lenders. Jersey and Tennessee count bridge lending or hard money lending as usury and have laws against such kind of practice. These laws, however, vary from state to state. Hard money loans can be lent out only to individuals according to some of these rules. Be sure to check with your lawyer or local legal authorities if hard money loans are legal in your state.
Commercial hard money lenders give loans only to commercial organizations. Private individuals looking for home loans etc are not entertained. Online directories enlist all kinds of lenders both regionally and nationally who are interested in giving out hard money loans. These are useful sources in locating and contacting lenders when in need of money.
Such loans are not always sought due to the problem of decomposing credit or defaults. There are some issues over which the banks are hesitant to give loans. In the real estate, hoses with uncommon or novel architecture which the banks consider untraditional due to their uncommon designs are considered unviable for loans. Hard money loans come without any such considerations and hence are a veritable boon for people facing financial problems.