The often misunderstood concept of hard money lending has been known as the black sheep of the money lending industry for a long time. As a matter of fact, hard money loans in some shape and form have been around since ancient civilizations. Hard money is a valuable concept of credit financing dating back to around the 18th-century B.C.E.
Over the next centuries, many national lending systems came about in civilizations such as the Roman Empire and the Spanish Empire. Today, we know this system in America as hard money lending. Let’s uncover a brief history of hard money loans to understand more about these common, often misinterpreted loans.
The Term “Hard Money”
Due to its reputation, hard money has had its certain highs and lows over the years. The term itself derives from the days of the Great Depression. After the banking industry collapsed and diminished consumers’ confidence in financial institutions, many people pulled their money out of the bank. Ergo, there was less money in circulation around the country, making it hard to find financing.
As many individuals could not quickly access excess cash, lenders created a solution. This “risky” loan utilized real estate property as collateral. A traditional hard money loan is a short-term loan thus secured by the value of specific real estate property.
The Climb of Private Lending
Next up on a brief history of hard money loans, we’ll look at the steady rise of private lending due to its on-demand nature. In the 1950s, this financing option grew increasingly opportunistic, as the American credit industry underwent a plethora of changes. Once again, many consumers struggled to obtain traditional loans for financial or government institutions.
Flashforward to the real estate crashes of the 1980s-1990s, when banks experienced an even wider range of failures and losses. Private lending rose once again as a substitute financing method. While hard money loans were seen as a last resort and were generally difficult to find, this alternative real estate financing option became a greater solution for a wider range of Americans.
The Hard Money Industry Today
After the market crash in 2008, hard money loans found a more permanent place in the lending industry. Now more than ever before, private lending is a viable and noteworthy financing option. For those who seek alternative methods, private lenders are accessible resources with respected reputations. Hard money loans at present are smart lending solutions that serve a practical purpose for borrowers and investors alike.
For direct hard money lenders in Orange County, CA, look no further than Val-Chris Investments. We provide creative loan solutions and terms for the financial requirements of our borrowers. As an experienced hard money lender, we focus on providing quality services for our customers and their needs. Contact us for more information about our private lending services.