Did you hear about the movement to turn “Hard Money” into “Private Money”?

Hard money. A term coined in the 1950s during the overhaul of the credit industry in the U.S. and Canada. These loans have been seen as a lifesaver for property investors seeking capital against the equity in their real estate holdings. A last resort-type of asset-based financing offered by private investors that provide borrowers with the funding they need. Essentially, hard money loans help an entrepreneur prevent that golden opportunity from slipping away. And now it’s a taboo term? Why exactly?

Okay, sure, interest rates for hard money loans tend to be higher than conventional loans for some residential and commercial properties. But you need to take a deeper dive into a quintessential hard money loan scenario. A time sensitive somewhat risky opportunity that needs funding fast. Does that hold true for every private lending loan? Of course not, but it is still a vital part of the private lending industry. We can all exist in the same universe, yet there’s a push by some residential private lenders, and industry media to recoin the name.

Even the National Private Lenders Association (NPLA), is looking to soften its hard money reputation with expressions like “private money” or “transitional lending”. True these terms do accurately paint a picture of advanced, streamlined underwriting standards tailored towards the borrower’s needs. However, should “private money” suddenly be the preferred term across the board and hard money wiped off the planet?

Just Google it and you’ll see. While private money has seen a rise in recent searches, hard money is still a term closely associated with the private lending industry.

Yes, it’s clear that the industry has come a long way in recent years. Private lending has transformed into a mainstream alternative that in some cases rivals traditional banking. And with continued growth and improvement, the industry is poised to play an even more important role in the future of commercial real estate finance. But all that being said, in times of crisis when you need that last second loan or your deal goes bust, do you really want to totally erase hard money loans from the equation? So, private money—can’t we all just get along?