Insula Capital Group

Hard Money Loans VS Traditional Loans: Which One Is Better?

If you’re a commercial real estate investor, your needs may not always be met with traditional loaning options. This is where hard money loans come in. Also known as private money lendings, in these loans, the collateral, which is the property being purchased, is the biggest factor, instead of the borrower’s credit profile.

An investment group or an investor usually issues hard money loans. Although hard money lenders generally charge pretty high-interest rates compared to banks, they do offer several benefits over traditional lending options. It must be noted that even developers and investors who have access to bank loans and have great financial statements often choose to borrow hard money loans due to their benefits.

Let’s look at some of the benefits of borrowing hard money loans.


In a hard money loan, the lender can lend the loan money pretty quickly. This comes in handy when you want to secure a real estate deal. A quicker approval process can potentially give you an advantage over other interested parties relying on slower, more traditional means of funding.

a person fanning out cash

Real estate deals can often be funded and completed within a week with a hard money loan. Now compare this time with the one and half months it typically takes to get a loan from a traditional bank or credit union. Sometimes the private lenders may be able to process and approve your application in just two days, and in ideal cases, on the very same day.


When it comes to private lending, the loan structure, repayment schedules, and collateral release conditions can be set in a way that’s in favor of both the borrower and the lender. Credit unions and banks are not generally very flexible in their terms and follow general guidelines with traditional loan approvals.

Hard loan lenders can often structure your loan based on a fixed percentage of the price of purchase or loan-to-cost, as well as loan-to-value, with the value being determined on the quick-sale worth of the collateral asset.


If you’ve ever been denied a traditional loan because of foreclosures, past credit issues, or a short sale, you must know how bothersome it could be. A credit union or a bank could reject your application for several reasons, even if you have a good credit history.

On the other hand, hard money loans are approved by private lenders who can look past such issues as far as the borrower can repay the loans, and they have enough equity in the property.

If you’re looking for hard money lenders, Insula Capital Group can help you. We also offer real estate lending, flip loan financing, and other loans. Contact us today to learn more about our financing services.