Why does the Commercial Hard Money Loan Application Process Feel Like a Strip Search

Have you ever felt like you have been strip-searched after just applying for a commercial hard money loan? In today’s real estate market, most commercial hard money lenders require too much personal information, so you may feel like they know every detail about you before they are done.

last updated Sunday, July 13, 2025
#Loan Application Process #Hard money loan

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by John Burson

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Although comparing your loan application procedure to strip searching is a bit extreme, handling details of your work history, investment history, credit history, and other lending criteria to secure a commercial hard money loan can feel intrusive. Have you ever wondered why today we cannot walk the real estate investing world without such intensive profiling? This can only be because of several changes in the commercial hard money lending industry over the last few years.

Commercial hard money lenders can initially lend to anyone based on the potential profits that can be generated by investing in a property. The lender had little to no emphasis on other personal lending criteria. At that time, having good credit, significant income, or investing experience didn’t matter. However, these were the glory days of the industry. The housing markets were always hot everywhere, and commercial hard money lending worked efficiently to provide fast money for real estate investors without putting them in over their heads.

The trouble started after the housing market crashed from 2008 to 2009. Most commercial hard money lenders lost their money during the crash, which forced them to tighten their lending criteria. Traditional lenders have also tightened their lending requirements, which explains why most commercial hard money lenders today share similar needs with conventional lenders.

In today’s real estate industry, commercial hard money lenders require similar requirements to those traditional lenders initially needed before the 2008-2009 real estate crash. This included;

• A complete job history
• Your current job
• A full credit history
• Real estate investment experience
• A 20% down payment
• Other expenses, including repair, title, and closing costs

The main advantage of commercial hard money lenders is that they can loan you to make repairs, and traditional lenders won’t. The most significant drawback of the change is the experience requirement. Most first-time real estate investors face the primary challenge of securing the necessary funds to close their first deal, and often, commercial hard money lenders deter new investors from entering the market even before they get started.

 
 
 

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