Hard money loans for commercial real estate can be likened to a release valve that bleeds off the pressure of an approaching loan maturity.
These financing solutions are some of the nimblest in commercial real estate financing, so practical in the right circumstances that many veteran developers routinely use them.
Exact centralized tracking for total hard money specifically deployed into US CRE in 2025 is not available because the sector is fragmented. Still, alternative and private commercial credit data shows that non-bank and private lenders filled a massive funding gap amid a $957 billion CRE debt maturity wall last year.
The overall US private and alternative lending market (which encompasses short-term bridge and hard money) expanded toward an estimated $2 trillion in assets during the same period.
According to data tracked by CBRE Group, alternative and non-bank lenders climbed rapidly to handle roughly 40% of non-agency commercial loan closings by late 2025.
Collateralized loan obligations (frequently used to package short-term transitional and bridge loans) saw a sharp post-COVID rebound totaling $30.6 billion in issuance through 2025, with multifamily assets making up about 70% of that total.
Can a Hard Money Loan Help Refinance a Commercial Property?
Yes. A hard money loan can refinance commercial real estate as a short-term bridge — typically 3 to 24 months, funded against the property’s value rather than the borrower’s income. Owners use it to clear a maturing balloon note, hold a value-add project through renovation, or refinance when DSCR is too low for a bank.
Hard money loans can be useful in refinancing commercial real estate, usually as a short-term commercial bridge loan.
If you have a maturing balloon note
You can use hard money to pay off an existing commercial loan that is due immediately to avoid giving the lender grounds to foreclose on the property.
If you have a value-add project
Hard money loans are also effective for buying or holding a commercial building to renovate it and raise rent after the improvements, with the intention of later refinancing into a traditional loan.
If your DSCR is too low
Equity-rich but cash-flow-poor owners (who would otherwise be denied a debt restructure by traditional banks due to current low DSCR or credit blemishes) can use hard money to borrow against the property’s equity to refinance their existing debt.
What are the benefits of using hard money for refinancing CRE?
Underwriting thresholds are flexible
Traditional commercial bank underwriters tend to follow strict and often highly automated guidelines. They expect borrowers to back up their income with tax returns and demonstrate that their personal credit falls within acceptable ranges. They also need the property to show strong historical financials.
In contrast, hard money lenders see the deal’s potential.
Because they themselves usually have extensive experience in developing commercial properties, they understand why a property is underperforming and will take the time to closely evaluate your rehabilitation plan.
Recent bankruptcies or low credit scores will not automatically cause your application to be rejected.
Many hard money lenders are also open to working with foreign investors who lack US credit histories as well as to complex corporate entities and trusts.
Lending decisions are made based on the asset (not the borrower)
Banks underwrite the borrower first and the property second. Hard money lenders do the opposite. They judge the loan request primarily on the liquidation value of the commercial property itself, particularly the LTV and/or the ARV.
If the property has strong intrinsic value or equity, your personal debt-to-income ratio matters very little.
Cross-collateralization may be permitted in some cases, meaning you can pledge equity from other properties you own to secure 100% financing for the new deal.
Funds are released faster
Hard money eliminates the institutional red tape banks are notorious for dragging borrowers through.
Deals take only several days to reach the closing table, provided that the lender can verify the collateral quickly. This could be vital if you need to refinance your commercial property with a note that will come due before a bank can close.
Related Blog: How Commercial Bridge Loans are different from Hard Money Loans
What should you be careful of when using hard money for refinancing commercial properties?
Hard money carries a risk of total capital loss if mismanaged. Interest rates are high and upfront origination points are often substantial, so your carry costs can accumulate.
You’ll need a bulletproof exit strategy to protect the equity you’re trying to preserve.
Interest rates are higher
Refinancing from a lower interest rate to a higher hard money rate sounds counterintuitive, until you compare it with the alternative of losing the property or missing a massive equity opportunity. That higher rate does not automatically make the loan a bad deal.
You can use hard money to replace a maturing loan if that cost is still cheaper than a foreclosure or a default judgment on their record.
That said, you need to know exactly how long you can afford to carry the new debt and where the money for each monthly payment will come from.
Upfront refinancing fees are expensive
The upfront points are calculated on your entire existing loan balance plus any new capital you pull out.
If you owe $3,000,000 on a commercial building and refinance into hard money, 3 points equals $90,000 in upfront lender fees alone.
Hard money lenders also usually require a new commercial appraisal and title insurance policy, which routinely cost $5,000 to $15,000 per transaction. These fees are deducted directly from the new loan amount in most cases.
Of course, expensive doesn’t necessarily mean irrational when the property has substantial equity at stake.
That $90,000 fee can still be cheaper than losing control of a multimillion-dollar property.
Loan terms are shorter
Traditional commercial property refinancing will often come with a 5- or 10-year term.
Refinancing with hard money, in contrast, will compress that to a runway of just 6 to 24 months. You’re already on the clock almost immediately after closing.
This means that if you’re refinancing to renovate a retail strip center or convert an office building, your construction schedules need to stay tightly controlled.
If your renovations get delayed, your hard money loan may mature before you can stabilize the property.
Lenders will start charging extension fees to keep you out of default, and those fees can be aggressive.
When does it make sense to take out a hard money loan to refinance an existing loan?
The table below shows where hard money tends to fit better and where a bank loan still has the advantage.
How can you avoid getting trapped in hard money?
You cannot “ride out” a hard money loan. You need a solid path back to permanent financing. Make sure that your exit strategy does not depend on everything going perfectly.
If you plan to exit via bank refinance (stabilization):
This strategy is best suited if your property currently has low occupancy or needs repairs.
You can refinance into hard money and use the next 12 months to lease up vacancies or complete repairs, bringing the DSCR up to a 1.25x standard.
Once occupancy and cash flow have improved, you can then refinance back into a cheaper traditional bank loan.
If you plan to exit via sale (flip/liquidation):
You can refinance an existing CRE loan using hard money if you’re up against a looming balloon payment deadline.
This hard money bridge will give you an extra 12 months to market and sell the commercial property at full market value.
You’re not forced into a panicked fire sale, so you can market the property properly. There’s no need to cut the price just to beat the clock.
Note: If your plan to lease up the building or sell it fails before the short term ends, the hard money lender will foreclose.
Because they rarely lend past 65% of the property’s current value, they have a massive equity cushion and will aggressively seize the asset to protect their capital.
Work with a hard money lender who understands commercial real estate
Private Capital Investors provides commercial hard money and bridge loans for CRE transactions: short-term, asset-focused financing designed for commercial property owners or investors who need capital right away.
Through our relationships with life companies, CMBS lenders, and pension funds, we also arrange permanent financing.
Our hard money loans are fast: funding can be allocated within about two weeks, and documentation requirements are comparatively light and are limited to what the deal actually requires. To start with, prepare your:
- loan application
- purchase contract (when applicable)
- renovation scope and budget
- bank statements showing funds/reserves
- identification documents
- entity documents
- property operating documents
Our hard money solutions can fund CRE transactions ranging from $1 million to $50 million. Loan terms run for 3 to 24 months and can cover up to 85% LTV.
