What is Soft Money and Why Should You Care About It?

THE 411 ON SOFT MONEY

In an earlier blog post I gave you the rundown on hard money lending. Now it’s time to talk about hard money’s cousin: soft money. In its simplest definition, soft money loans are loans with a soft or low interest rate. They are qualified in a similar fashion to hard money loans, but they also come with all of the perks. Borrowers of soft money lending enjoy the following benefits:

  • Ease in obtaining the loan

  • Quick access to funds

  • Financial backing from private investors

  • Financial decisions that rest heavily on collateral

However, soft money lending is different from hard money lending in the following ways:

  • Credit score and credit history are taken into account

  • There’s a longer repayment term

  • They have lower interest rates

In essence, soft money loans are a combination of traditional lending and hard money lending. With soft money loans, you are still expected to pledge your assets as collateral for the loan. However, your credit is also taken into account giving you a longer repayment term and lower interest rate (assuming that you have a satisfactory credit score).

THE ADVANTAGES OF SOFT MONEY

Like hard money loans, soft money loans are not required to meet specific nationwide or state standards. Soft money lenders like Hanson Capital Group can create their own loan criteria and terms because funding comes from private investors, instead of a big corporation.

Therefore, with soft money loans, the credit standards are not as restrictive as those implemented at traditional banks. The other difference between conventional banking and soft money lending is that proof of income isn’t required.

As a private lender in Phoenix, AZ, Hanson Capital Group offers both hard money and soft money loans to meet a wide range of financial circumstances. We’ll work with you to obtain the loan that best meets your individual needs. With creative structuring, rapid funding and flexibility in loan options, our borrowers can rest easy knowing that we’re there to help them in every way possible.

Give us a call at (480) 685-4923 and we’ll help you determine which our of loan programs is right for you.

 

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