Orchestra Funding

		November, 2004 By Blair Portigal President InSymphony Private Capital THIS IS HARD TO TALK ABOUT Historically, orchestra (a very new term) lending professionals were known as “hard money” lenders. This was often misinterpreted, and, since the industry is relatively “beneath the radar,” misunderstood. Because of this fact, I was often asked, over the years, for a brief explanation of what is meant by hard money lender. The following captures the essence of what I said. Hard money lenders are commercial real estate lending companies offering a specialized type of real estate backed loan. Hard money lenders provide short-term loans, or bridge loans, that provide funding based on the value of real estate that has been collateralized for the loan. Hard money lenders typically have higher interest rates than traditional banks, even though many of their deals conform to bank standards. The loan amount, interest rate, and term of a hard money loan is generally determined by the prospective borrower’s equity in a specific asset, the market place, the value of the assets and the financial standing of the borrower. Each hard money lender determines the parameters and restrictions they will impose on loans. Many borrowers utilize this short term bridge financing to take advantage of an opportunity or to restructure existing debt. Often traditional banks take too long in their underwriting process which may present a problem for the borrower if cash is required within a short period of time. The most common uses of hard money is for business purposes, when time is of the essence, and when the borrower or asset do not fall within the often stringent loan criteria for banks. It is likely that current publicity (from books like the recently released Spark: Lending Your Way To Real Estate Millions from Literary Press) and education about orchestra lending (my preferred term for hard, or seed, capital) will reduce the necessity for the “clarifying statements,”—and the whole business will be much easier to talk about. You can reach Mr. Portigal directly at: blair@InSymphony.us		Simply ask to be added and you will receive: Member’s Only Insights Discounts to Special Events “Ahead of the Curve” Industry Updat

November, 2004
By Blair Portigal
President InSymphony Private Capital

THIS IS HARD TO TALK ABOUT

Historically, orchestra (a very new term) lending professionals were known as “hard money” lenders. This was often misinterpreted, and, since the industry is relatively “beneath the radar,” misunderstood.

Because of this fact, I was often asked, over the years, for a brief explanation of what is meant by hard money lender. The following captures the essence of what I said.

Hard money lenders are commercial real estate lending companies offering a specialized type of real estate backed loan. Hard money lenders provide short-term loans, or bridge loans, that provide funding based on the value of real estate that has been collateralized for the loan. Hard money lenders typically have higher interest rates than traditional banks, even though many of their deals conform to bank standards. The loan amount, interest rate, and term of a hard money loan is generally determined by the prospective borrower’s equity in a specific asset, the market place, the value of the assets and the financial standing of the borrower. Each hard money lender determines the parameters and restrictions they will impose on loans. Many borrowers utilize this short term bridge financing to take advantage of an opportunity or to restructure existing debt. Often traditional banks take too long in their underwriting process which may present a problem for the borrower if cash is required within a short period of time. The most common uses of hard money is for business purposes, when time is of the essence, and when the borrower or asset do not fall within the often stringent loan criteria for banks.

It is likely that current publicity (from books like the recently released Spark: Lending Your Way To Real Estate Millions from Literary Press) and education about orchestra lending (my preferred term for hard, or seed, capital) will reduce the necessity for the “clarifying statements,”—and the whole business will be much easier to talk about.

You can reach Mr. Portigal directly at: blair@InSymphony.us

Simply ask to be added and you will receive:

Member’s Only Insights
Discounts to Special Events
“Ahead of the Curve” Industry Updat