Overview
Hard money loans are asset-based loans that emphasize collateral and speed. In car wash financing, hard money is typically used when a borrower needs to close quickly or when the deal is not ready for bank or SBA underwriting due to transitional conditions.
When hard money is commonly used
- Time-sensitive acquisitions with short closing windows
- Properties needing repairs before long-term financing is available
- Complex situations where documentation is incomplete or inconsistent
- Bridge-to-refinance plans after stabilization and documentation improvements
How hard money lenders underwrite
Hard money lenders generally focus on collateral value, leverage, and borrower capacity. They still care about a credible plan, but they often do not require the same depth of historical financial documentation that bank lenders demand.
Benefits and tradeoffs
The benefit is speed and flexibility. The tradeoff is usually cost and shorter term. Borrowers should understand payoff timing, extension options, and how the loan will be refinanced or repaid.
What borrowers should be careful about
The biggest risk is entering a short-term loan without a clear exit plan. If repairs take longer than expected or documentation remains weak, refinancing can be delayed. Plan for adequate reserves and realistic timelines.
Bottom line
Hard money loans can work for car wash businesses when the need is speed and the borrower has a clear, realistic plan to stabilize and refinance into longer-term financing.