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Types of Hard Money Loans

In the world of hard money lending, real estate loans are often the go-to. Why? Real estate loans provide the lenders with a physical piece of collateral to keep the loan isn’t repaid. 

Hard money loans usually make sense for the lenders but not always the borrowers. Borrowers interested in hard money loans for immediate needs should know exactly what they’re getting into before they decide to proceed with a hard money loan. 

What is a Hard Money Loan?

Hard money loans are a type of loan which borrowers secure with real property or “hard” collateral. 

Borrowers most often use hard money loans for real estate transactions. Additionally, hard money loans are typically sourced from an individual or investment company, not a bank or other financial institution. 

Are Hard Money Loans Reputable?

Hard money lenders are often part of an alternative lending organization and can be reputable. 

However, borrowers can protect themselves by looking out for red flags as they venture into the world of alternative lending. These red flags may include:

  • Blank spaces in documents
  • Prepayment penalties
  • Additional services packed into the loan
  • Extra-fast closing

Choosing to use alternative lenders means taking the time to carefully understand what your loan terms are and what your capacity is to repay them.

For more information, learn how to avoid predatory lenders, here. 

Why Are Hard Money Loans Expensive?

Hard money loans often have quick approval processes and few qualification requirements. These loans get borrowers the money they need when they need it. In addition, lenders do not typically focus as closely on credit scores when approving hard money loans and are therefore more likely to work with borrowers with a poor credit history. Because of this, the lender is taking on more risk.

These benefits don’t come cheap. Hard money loans are often associated with high-interest rates and the risk of the borrower losing the collateral property if they default on the loan.

Common Uses for Hard Money Loans

Infographic on five types of hard money loans

Fix and Flip Loans

Real estate investors use fix and flip loans to purchase properties, improve them, and sell them at a profit. Borrowers use these loans to support the purchase of the property and in addition to covering associated costs to complete the renovation. 

Residential Renovation Loans

Residential renovation loans use a property’s estimated value after renovation instead of its current home value to calculate how much the property owner can borrow. This gives borrowers more credit than if the value is calculated based on the value of the home before the renovations. 

Investment Property Loans

Investment property loans help borrowers purchase homes to rent out for extra income or to flip and sell for a profit. 

Cash-Out Refinance Loans

A cash-out refinance loan replaces a borrower’s current mortgage with an updated, larger loan. This loan pays the difference between the amount borrowed and what the borrower still owes on the home.

Cash-out refinance loans provide borrowers with a new home loan for more than they currently owe on their house, allowing them to spend more on home improvements, debt consolidation, or other financial obligations. 

Types of Hard Money Loans For Businesses with Cash Needs

Commercial Bridge Loans

Borrowers use commercial bridge loans to fund a specific project or immediate opportunity, usually in real estate. These loans typically “bridge the gap” between the borrower needing to meet the financial obligation–for example, purchasing a property– and securing long-term funding. 

Commercial Foreclosure Bailout Loans

Commercial foreclosure bailout loans stop foreclosures and pay off the existing mortgage with a new one. These loans can get complicated; we suggest working with a professional or even an attorney when working with commercial foreclosure bailout loans. 

Consider Crivello

If you know how hard money lending works but don’t want to go through the stricter process with a conventional alternative lender – we should talk.

Our mission at Crivello Capital is to positively impact communities and the lives of business owners through direct investments, real estate investments, and alternative lending. We focus on clarity, transparency, and a no-nonsense approach to lending and investment. Read about our responsible investments to learn more about us and our principals. 

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How to Find a Private Money Investor

Let’s be honest–If you googled “how to find a private money investor,” you may have bigger problems than finding a private money investor. 

Let me explain: many successful businesses have a tight network of fellow business people who can refer you to the right private investor–do the terms primary circle and secondary circle sound familiar to you?

These terms suggest that business owners already know private investors through friends, family, or other connections before the deal is closed.  

Don’t let this intimidate you. You can still access the funds you need for your business through a private investor by connecting to investors in other ways. 

Looking For a Private Investor? Meet Crivello Capital

If you did google it and were led here without knowing who Crivello Capital is–I’ll tell you.

Crivello Capital is a private investment company focused on the positive impact capital can make in communities and the lives of business owners. We place an emphasis on investing in opportunity zones, as well as investing in startups who show promise. Learn more about opportunity zones, here. 

What Makes Crivello Different Than Other Private Investors? 

I’m a one-man show with a no-nonsense approach. That means no red tape, no piles of paperwork, or mountains of forms. I’m here to invest wisely in companies that excite me and are making communities better. 

Learn more about Crivello Capital, here. 

Let’s review what private investment is and how it works so you can fully understand what I do and how it can help your business. 

What Is A Private Money Investor?

A private money investor–also referred to as a private money lender– uses their private capital to finance investments. Private investors work directly with the borrowers and are not affiliated with a financial institution.

Who Is Considered A Private Money Investor?

A private lender is a person or fund that is not a bank or credit union and is not a loan broker.  A private lender has money to lend directly and has their own criteria for who to lend it to. 

There are three circles of private lenders. Let’s take a moment to break them down. 

The Primary Circle

The primary circle is people you know: a parent, cousin, friend from high school, the pitcher from the company baseball team that throws a wicked curveball. 

The Secondary Circle

The secondary circle consists of colleagues and friends of your primary circle. For example, your dad’s friend from business school, your best friend’s colleague, the company pitcher’s friend from their last job. 

The Third-Party Circle

This is where I come in. The third-party circle is people you don’t personally know. This is the largest capital pool you can access and it’s full of opportunities. 

Why Are Private Investors A Valuable Asset?

I’m so glad you asked. Private investors can be an attractive option for borrowers because they have different approval requirements and faster application processes than financial institutions, like banks. 

Because of these differences, private investors may be more willing to work with borrowers with poor credit. Additionally, private lenders often have an informal or streamlined application process, allowing borrowers quicker access to the funds. 

How Do Private Investors Work?

The process of working with private lenders will be similar to other types of loans. Borrowers apply for funding, use the funds for the designated project or purpose, and pay the loan back in installments with interest. Like loans from financial institutions, the interest rates and qualifications can vary depending on factors such as the investor, the project, and the borrower. 

What Investments Do Private Investors Fund?

If you looked up what kinds of businesses private money lenders invest in, you’ll mostly see real estate investments.  While private investors do commonly invest in real estate, private money, not a fund, invests in whatever it wants to invest in–that’s why it’s private. 

Banks have regulations, brokers have fees, and private lenders set terms and rates based on an individual case-by-case basis. 

How Do You Borrow Money From a Private Lender?

First, show me what you got; present your financial information completely and accurately. I want to see the good, the bad, and the reality.

It’s tempting to make your books look better than they are but it’s probably not in your best interest; if your business is struggling because of poor financial management, it’s important to find the problem as quickly as possible so you can learn, adjust, and get better as a business owner.

How Do I Find Private Funds?

There are a couple of different routes you could take in looking for private funds and private investors. 

  • You could google “how do I find private funds?” for some online resources.
  • You could ask other business owners. Fellow owners may work with private investors or banks that have relationships with alternative lenders. 
  • You could network online, at events, etc. to connect with private investors and convince them to invest in your business.

Or,  you can reach out to me and tell me why investing in your business is a good idea. Apply for capital in 4 simple steps, here. 

How Do I Verify a Private Investor?

That’s a good question. 

Larger lending institutions can be a bit of a double-edged sword; bigger institutions will have a full, credible lending history but often set more regulations and rigid criteria for lending. 

To verify private investors, you can:

  • Talk to a business owner the investor previously loaned to
  • Ask questions
  • Meet face-to-face
  • Use your judgment
  • Only agree to terms you feel are fair

A Final Word

Private money can be an attractive alternative lending option to traditional bank loans because private investors offer faster approvals, lenient restrictions and may work with borrowers with low credit scores. That being said–private money isn’t for everyone.

Private lending can be a seedy world–that’s why it’s imperative you find the right private investor for you and your business. 

At Crivello Capital, we take pride in our transparent process and no-nonsense approach. We want to bring clarity back into the transactional world of corporate lending and investment. Sound good to you?

Learn more about Crivello Capital and our mission, here.

Ready to Apply for Capital?

Apply for capital in 4 simple steps, here. 
Read on to learn more about Crivello and what to do if you’re unbankable.

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What is an Opportunity Fund?

Who Qualifies as an Opportunity Fund?

Opportunity Funds self-certify with the U.S. Treasury Department.

A certified Opportunity Fund invests 90% of its assets in Qualified Opportunity Zones (QOZ) and must verify these ratios with the Treasury Dept. bi-annually.

Opportunity Zone properties must pass these tests:

  • Must be in a registered Opportunity Zone
  • Must be new construction or…
  • More investment must be made in the property than the purchase price.
  • A business that receives OZ Funding must be located in an Opportunity Zone and do at least 50% of its business there.

How Do Investments in Opportunity Zones Work?

The Opportunity Zones program provides a tax incentive for investors that can be paired with other tax incentive programs. Programs such as the Low Income Housing Tax Credit (LIHTC) program, the New Markets Tax Credit (NMTC) program, and the HTC, or Historic Tax Credits program

To qualify for the capital gains tax deferral, investment in an Opportunity Fund has to be made within 180 days of the sale of the assets being reinvested.

Opportunity Funds cannot hold investor funds for more than 6 months before investing in an Opportunity Zone and if a person should sell to an Opportunity Fund , they cannot hold more than 20% ownership in that fund.

The State of Opportunity Zones


What Designates an Opportunity Zone?

High need and growth potential. Opportunity Zones contain 24 million jobs and 1.6 million businesses. Many areas have already seen some positive economic growth preceding the 2018 OZ designation.

The Zones are prioritized as high-need with an average poverty rate of nearly 31%, and an average median family income of 59% of the area median (thresholds were set at 20% and 80% respectively.

Older structures offer an opportunity for positive impact. With a median age of 50 years, these neighborhoods urgently need reinvestment.

Between 2018 – 2028: Private investors are eligible for tax benefits in return for investing in low-income communities designated by the governor of every state and certified by the U.S. Treasury Secretary.


Opportunity Zones were created by the Investing in Opportunity Act, part of the Tax Cuts and Jobs Act of 2017. This act received significant bipartisan support and was championed by the Economic Innovation Group, a think tank group out of California.

The Investing in Opportunity Act requested that governors select 25% of their low-income, economically disadvantaged areas as “Opportunity Zones” based on the following thresholds:

  • Median family income of less than 80% of the statewide median

  • Poverty rate of 20%

Where are Opportunity Zones?


While Opportunity Zones are found in both urban and rural areas there is a concentration in high-density urban areas. 

Opportunity Zone Demographics

Opportunity Zones contain 31.3 million people (*American Community Survey). 56% of Opportunity Zones residents are minorities, compared to 38% nationwide. Many Opportunity Zones are in high-density urban areas offering opportunities to positively impact the urban housing crisis and create business venues for small business owners.



Click to explore opportunity Zones in your area

*powered by eig.org



Crivello Properties is a registered Opportunity Fund.

We make commercial property financing in Opportunity Zones easy. 

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Business Financing Types

Debt Financing


Debt Financing relies on your personal and company credit.  This is a good option for variable income issues or high growth phases. 


Apply for Debt Financing

Debt Financing & Working Capital Loans

One type of debt financing is a working capital loan.  Working capital loans are best used to fund short-term, operational needs. If your business is seasonal, if you find covering expenses when times are slow is threatening your ability to stay in business, a working capital loan is a good solution.

Examples of what a working capital loan can cover:

  • Adding inventory
  • Buying Supplies
  • Hiring More Staff
  • Paying A.P.

Who benefits from a working capital loan?

Companies in early startup and early growth phases often lack predictable revenue or the kind of historical data needed to get a bank loan or inspire VC or traditional PE investors.  A working capital loan is a way to cover expenses, grow and take market share to prove out a concept or to ride out a lull in sales or revenue.

Does everyone qualify?

No. But we are not like the Private Equity investors of the past or the Banks of right now.  We look at options to help you.  If a straight loan isn’t right for you, we explore other ways to collateralize the cash you need.  Our goal is to make your life better. Sometimes, that means taking a risk and trying something new and different.

Inventory Financing


Collateral is key to getting capital. 


Apply for Inventory Financing

Using what you have to get what you need

Using your current stock of inventory as collateral to purchase more inventory makes sense if your business is experiencing cash-flow issues but business is still good. As your company takes on more orders or builds new partnerships, you may find you need to stock more inventory than you can afford just yet.  This is where inventory financing comes from.

Different types of Inventory Financing include:

An Inventory Line of Credit

If your personal or corporate credit is not stellar, banks may be unwilling to grant you a business loan.  we can help with an inventory-collateralized line of credit.  The advantage to a line of credit over a loan is that you only pay interest on the money as you draw it from the line, not all at once from the moment of loan inception.

A.R. Financing

Accounts Receivable financing allows you to collateralize the debts other have to you.  They’re good for it, they just haven’t paid yet.  AR Financing helps with cash flow issues and takes away the worry of financing your own purchases of the next round of inventory.

The benefits of Inventory Financing:

Inventory Financing loans can be a lot cheaper than merchant cash advances, revenue-based financing or loans that are charged based on a percentage of your revenue, often costing more than 30%. IT’s a good option if your credit is not good enough for a working capital loan, if you have inventory to use as collateral, and if you’re looking to grow through offering more products.

Purchase Order Financing


When you need to pay your suppliers but have to allocate cash elsewhere. 

Support where you need it

Purchase Order Financing is like Accounts Receivable Financing but it is based, you guessed it, on your Purchase Orders to ensure your ability to repay.

Here’s how it works:

Once you have received a P.O. from a buyer & place your order with your supplier we step in and pay the manufacturer directly. The advantage is that your supplier is paid on time and gets you your goods quickly. The disadvantage might be that they are receiving the funds from a 3rd party which may alert them to cash flow issues.

Once the manufacturer sends you the product you ordered you then invoice your client because you are ready to ship to them. Your client pays their invoice, part of which goes to us and your company’s operations remain smooth.

Who should use P.O. Financing?

If you need more than $250K and have profit margins of> 20%, P.O. Financing might be the right choice for you.  If you want to pay specific suppliers but can handle the rest of your operational needs, P.O. Financing is a good choice.  However, if you are waiting for payment for goods you’ve already shipped, A.R. Financing (it Invoice Factoring) is probably a better choice for you.

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What do I do if I’m non-bankable?

Being non-bankable used to be like not having a college degree.  People looked at you sideways and wondered what was wrong with you.  But that’s not the case anymore with either of those states of being because the world is evolving and the old way of doing things is… well, it’s not. 

At Crivello Lending we’re not interested in the forms banks have you fill out or the hoops you have to jump through to get a bank loan.  We’re interested in how resourceful you are, how reliable you are and whether our investment is redeemable. 

Honesty is at the core of everything we do, so let’s be honest.  Banks don’t lend to people because they can’t see the first for the trees.  They look a t a narrow set of numbers and that’s all they see. 

We see the work that has gone into building your business, the creativity that is going into your enterprise and factor in all of the elements of your ability to repay before discussing what options we can offer. 

Some common loan structures include:

FACTORING (AR Lending)

Factoring is the same as accounts receivable lending. The borrower pays a percentage of the total amount of accounts receivables sold.. This allows businesses with aging Ap to get cash immediately 

ASSET-BASED LENDING

Asset-based loans use your assets as collateral for a loan or line of credit you can draw on on an as-needed basis. 

An Asset-Based Loan is usually determined by a borrowing base (a percentage of the value of the collateral, usually 75% to 85% of the value of the AR, or 50% of the value of inventory and equipment. Because it’s based on your assets, your financing can grow with you. 

At Crivello Lending, we are not tied to what others have done before. 

We look at your business and talk to you to find creative solutions for your lending needs.  You need money, we have money, we should talk. 

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How to Attract Investors to Your Opportunity Zone

It is not up to outsiders to decide what the right investment is for any given community. It falls to that community to recognize the needs of its businesses. Since 2017 with the Tax Cuts and Jobs Act, governors of states in the US have been able to designate certain areas as Opportunity Zones. Once designated, those community leaders and businesses in that area find there are few resources to discover how to engage Opportunity Zone investors to support them. The EPA outlines five key strategies for engaging Opportunity Zones investors including resources and tips that can help communities attract investment to their revitalization efforts.

Investors in Opportunity Zones are seeking tax incentives to offset capital gains.  While many OZ funds are altruistic, the investors in that fund are often simple seeking a tax shelter. 

The tax incentives of investing in an Opportunity Fund are:

  1. Defer federal capital gains taxes owed today for a period of years
  2. Be eligible to receive a reduction in those capital gains taxes
  3. Be exempted from paying future capital gains taxes if certain investment criteria are met. 

Sometimes an Opportunity Fund is established by an individual investor, such as in the case of our Crivello Capital Fund. Opportunity Funds can invest in projects or businesses in any of the 8,700+ Opportunity Zones, they are not limited to the area in which the fund is created. 

Novogradac is a company that maintains a national database of Opportunity Funds that voluntarily report their investment activities and they reported OFs raising over $12 billion for  Opportunity Zone projects and businesses. Some of the funds invest in projects in a single city or state, and many with a regional or national focus.

Evaluating Community Resources 

In 2020, the Economic Innovation Group released results stating that 40% of Opportunity Zone investments are buoyed up by outside investment from local Development Finance Agencies (DFAs), Community Development Finance Institutions (CDFIs), traditional lenders, tax credit investors, or other government and philanthropic grants. 

Securing funding from federal agencies such as the U.S. Environmental Protection Agency, Economic Development Administration, Department of Housing and Urban Development, or Department of Agriculture helps to attract Opportunity Zone investment.

Strategies for Engaging Investors 

Investors do not need local communities to be experts on Opportunity Zones statutes and regulations. They just need community leaders to align their capital with community priorities. 

Be prepared

Put together a presentation that outlines why you need investment, what your business plan is, how an investor would get paid back and on what timeline. 

Stay in touch

Talk to the OF managers regularly about opportunities, businesses, buildings and projects.  Remember, they are not in your neighborhood, they won’t know who is ready for investment. 

Enlist the big dogs

One idea is to coordinate with local hospitals, universities, or other major employers who likely already have investor relationships. These types of major institutions benefit from a thriving economy, so there is an incentive for them to partner on revitalization efforts, especially in distressed neighborhoods and communities. 

Prioritize 

Pick something shiny and big to invite that initial investment, and more money will follow. Organizations like The Opportunity Exchange provide options for sharing project goals to a national audience of interested investors, and your marquee project will be very attractive to outsiders.

Sell it 

Getting local investors involved signals to Opportunity Funds that they don’t want to be late to the party.  Local investors can get the ball rolling and OZ investors will hop on board

Know what you want

If what you want is a thriving downtown, clarify that goal. If what you want is more green space, be clear not hat too.  OZ funds are more likely to invest if you can articulate the end goal clearly. Many investors have a goal of creating positive impact.

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When is my business ready to raise capital?

You may have been told that the only thing to do now is grow, and to do that you have to raise capital. The fact is, that’s not always true. When it’s the right time to raise capital you’ll have to jump through quite a few hoops in order to attract the right investors. So how do you know what that time has come?

Half of all businesses in the United States fail within the first five years, 72% fail because they didn’t start with enough money. So whether you’re in growth mode or just starting out, capital is essential to your longevity and success.

So if you’re cash-strapped you might be thinking: I’ll just raise money. Before you do that, let’s review some of the indicators that you are – in fact – ready for a cap-raise (And some that you’re not).

You’re ready to raise capital if…

You have a strong, clear business plan

Failing to plan is planning to fail. Without a clear, well-structured business plan no investor will look at your company seriously and you are truly running from the back of the pack. Get into a peer-to-peer CEO/ Founder group ASAP and learn about what you need to create a business plan.

You have a ton of demand for your products and services… so much you just can’t keep up

If you have back-orders and are promising above your manufacturing ability, an investor sees their return laid out like the yellow brick road.

Your staff is maxed out.

If you don’t know your utilization rates just look around. Is everyone stressed, running on all cylinders, are balls getting dropped? You have to hire to meet demand. Think specifically about the roles you need and what impact they will have on profitability.

You know what the money is for

Just like your business plan, you should have an investment plan.

People send you new business

Reputation means something. If your clients are sending referrals that speaks to the quality of work that you do.

You’re not ready to raise capital if…

You’re just too busy, too too busy to commit to the process

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When you raise capital, you’ll need to take a step back from focusing on the business. If the whole thing falls apart when you get a cold, it’s time to hire a business coach, not raise funds.

You’re in a dying, shrinking or static industry

If you are making wingtip shoes, you’re going to have a hard sell to a VC Firm. Look at the growth trajectories and consider what you can pivot to if your industry is waning before asking for investment.

You’re a Control Freak

Be honest, if you can’t have input, you don’t want VC or PEG investment. Some investors are hands-off but you’ll have to account for your spending when its someone else’s money on the table.

You’re looking at an exit in < 3 years


If you think you’re going to sell in the near future, just hang on. having investors makes an acquisition less appealing because they’ll have to be bought out.

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How to Avoid Predatory Lenders

What is Predatory Lending?

“Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower.” It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative, or unscrupulous actions for a loan that a borrower doesn’t need, doesn’t want, or can’t afford. What you can afford however may not be what a traditional bank thinks you can afford. Choosing to use alternative lenders means taking the time to carefully understand what your loan terms are and what your capacity is to repay them.

Here are some red flags to look out for when you venture into the world of alternative lending.

Blank Spaces in Documents

Be careful of what is not in the documents you sign. Have. lawyer review any contract, there are services like LegalZoom, Trust & Will, and Trademarkia that offer online legal services at reasonable rates.

Prepayment Penalties

While prepayment penalties are common, even with traditional banks, be sure you know how much they are and at what point in the loan’s lifecycle they will be waived.

Additional Services packed into a loan

Predatory loans sometimes have health insurance or other add-ons packed in. If it’s not directly related to what you are getting your loan for, make sure it is removed.

Extra-Fast Closing

Speed can be important but being rushed to sign is a red flag. Take the time to read what you sign to be sure you are knowledgable about your loan’s terms, fees, schedule and requirements.

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