1. What is a Hard Money Business Loan?

Hard money business loans are short-term loans secured by real estate, typically used by investors and businesses needing quick financing. They have higher interest rates than traditional loans but are easier to qualify for.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Loan principal amount ($)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments (term in months)

Explanation: This formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest.

3. Understanding Loan Payments

Details: Hard money loans typically have terms from 6-36 months with interest rates between 8-15%. Payments are usually interest-only for the first period, then amortizing.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 12 for 12%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's typical for hard money loan terms?
A: Terms usually range 6-36 months with rates of 8-15% and loan-to-value ratios of 50-70%.

Q2: Are payments interest-only?
A: Many hard money loans start with interest-only payments, then convert to amortizing. This calculator shows fully amortizing payments.

Q3: What fees are involved?
A: Hard money loans often have origination fees (2-5 points), processing fees, and prepayment penalties.

Q4: How does this compare to traditional loans?
A: Hard money loans are more expensive but faster to obtain and based more on collateral than credit.

Q5: When is hard money appropriate?
A: For time-sensitive deals, property rehab projects, or when traditional financing isn't available.