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money lending business plan template

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Hard Money Lending Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Financial Services

A hard money lending business is a type of lending activity where loans are provided to borrowers based on the collateral they offer, rather than the borrower’s creditworthiness.

These loans are typically short-term and are secured by real estate or other valuable assets. Hard money lenders are private individuals or organizations that specialize in these types of loans.

Hard money lending is commonly used by real estate investors and developers who need quick access to funds for property purchases, renovations, or other time-sensitive projects.

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While it can be a valuable source of financing for those who may not qualify for traditional loans, borrowers should carefully consider the higher costs and risks associated with hard money loans.

Additionally, hard money lenders should conduct thorough due diligence on the collateral and borrower to mitigate potential risks.

Steps on How to Write a Hard Money Lending Business Plan

Executive summary.

Jared Moore® Hard Money Lending, Inc. is a reputable and dynamic hard money lending firm headquartered in Detroit, Michigan.

Established with a commitment to providing efficient and flexible financing solutions, our company specializes in short-term loans secured by real estate assets.

Detroit, Michigan, presents a unique and burgeoning real estate market, with increasing demand for flexible financing options.

As the city undergoes revitalization and development, Jared Moore® Hard Money Lending, Inc. is strategically positioned to contribute to the growth of local businesses and real estate ventures.

Company Profile

A. our products and services.

Jared Moore® Hard Money Lending, Inc. offers a range of hard money lending services tailored to the unique needs of our clients, including:

  • Short-Term Real Estate Loans: Providing swift and hassle-free financing solutions for real estate investments, acquisitions, and development projects.
  • Collateral-Based Financing: Evaluating loan eligibility primarily based on the value of the collateral, allowing for a more inclusive approach to lending.
  • Quick Approval and Funding: Streamlining the lending process to ensure rapid approval and timely disbursement of funds, supporting our clients’ time-sensitive projects.
  • Flexible Terms: We offer customized loan structures, repayment schedules, and conditions to accommodate the diverse needs of our borrowers.

b. Nature of the Business

Jared Moore® Hard Money Lending, Inc. operates through a multi-faceted business model. We will work with individuals and businesses.

c. The Industry

Jared Moore® Hard Money Lending, Inc. will operate in the broader financial services industry, specifically, within the subsector of alternative or non-traditional lending services.

d. Mission Statement

At Jared Moore® Hard Money Lending, Inc., our mission is to empower real estate investors and developers by providing swift and reliable access to capital through collateral-based lending.

We are dedicated to facilitating the success of our client’s projects by offering efficient and flexible financing solutions. With a commitment to integrity, transparency, and customer satisfaction, we strive to be a trusted partner in their journey towards achieving their real estate goals.

e. Vision Statement

Our vision at Jared Moore® Hard Money Lending, Inc. is to be the premier hard money lending institution, recognized for innovation, excellence, and unwavering commitment to our clients. We aspire to set industry standards by consistently delivering fast, reliable, and tailored financing solutions.

Through strategic partnerships and a deep understanding of the real estate market, we aim to be a driving force behind the success of diverse projects, playing a pivotal role in the transformation and revitalization of communities.

f. Our Tagline (Slogan)

“Empowering Visions, Fueling Progress: Jared Moore® Hard Money Lending, Inc.”

g. Legal Structure of the Business (LLC, C Corp, S Corp, LLP)

Jared Moore® Hard Money Lending, Inc. will be formed as a Limited Liability Company (LLC).

h. Our Organizational Structure

  • Chief Operating Officer (Owner)
  • General Manager
  • Compliance Manager
  • Loan Advisors (Loan Officers)
  • Sales and Marketing Officer
  • Customer Service Representatives

i. Ownership/Shareholder Structure and Board Members

  • Jared Moore (Owner and Chairman/Chief Executive Officer) 56 Percent Shares
  • Joel Davids (Board Member) 14 Percent Shares
  • Edmond Hankins (Board Member) 10 Percent Shares
  • Robinson Gatwick (Board Member) 10 Percent Shares
  • Christiana Samson (Board Member and Secretary) 10 Percent Shares.

SWOT Analysis

A. strength.

  • A team of seasoned professionals with extensive knowledge in hard money lending, real estate, and financial services.
  • Ability to offer customized and flexible loan structures tailored to meet the diverse needs of clients.
  • Streamlined processes for rapid approval and disbursement of funds, providing a competitive advantage in time-sensitive real estate transactions.
  • In-depth understanding of the Detroit real estate market, allowing for informed decision-making and strategic lending.
  • Commitment to integrity, transparency, and customer satisfaction, fostering strong and lasting relationships with clients.

b. Weakness

  • Reliance on collateral-based lending may lead to higher interest rates, potentially limiting the market to borrowers willing to accept these terms.
  • Vulnerability to fluctuations in the real estate market, economic downturns, or adverse local economic conditions.
  • As a localized business, expansion into new markets may be challenging, limiting growth opportunities.

c. Opportunities

  • Capitalizing on the growth potential of the Detroit real estate market and emerging opportunities in revitalization projects.
  • Exploring additional financial products or services to diversify revenue streams and mitigate risks.
  • Implementing technology solutions for enhanced efficiency in loan processing, risk assessment, and customer relationship management.
  • Collaborating with real estate developers, brokers, or other industry players to expand market reach and increase the volume of loan opportunities.

i. How Big is the Industry?

The hard money line of business is not considered a big industry in the United States. However, it’s important to note that the industry is relatively niche compared to the broader lending market.

ii. Is the Industry Growing or Declining?

The hard money lending industry has seen growth in recent years, driven by various factors, including increased real estate investment activities, a need for quick and flexible financing, and a growing number of real estate developers and investors seeking alternative funding sources.

iii. What are the Future Trends in the Industry?

Increased use of technology for loan processing, underwriting, and customer relationship management. Automation and digital tools may streamline operations, enhance efficiency, and improve the overall borrower experience.

Growing reliance on data analytics and sophisticated risk assessment models to evaluate collateral and borrower creditworthiness. This trend can contribute to more accurate lending decisions and risk mitigation.

Continued expansion into new geographical markets as hard money lenders seek opportunities beyond their traditional locations. This may be driven by the identification of emerging real estate markets and the need for diversification.

Collaboration between hard money lenders and financial technology (FinTech) companies to leverage innovative solutions, such as blockchain for secure transactions or smart contracts for automated and transparent loan agreements.

Exploration of alternative assets beyond real estate as collateral for hard money loans. This could include intellectual property, equipment, or other valuable assets.

Economic conditions and interest rate fluctuations will continue to influence the industry. Changes in economic outlooks may impact borrower demand and the overall health of the hard money lending sector.

iv. Are There Existing Niches in the Industry?

No, there are no existing niches when it comes to a hard money lending business because a hard money lending business is a niche idea in the financial services industry.

v. Can You Sell a Franchise of Your Business in the Future?

Jared Moore® Hard Money Lending, Inc. has the plan to sell franchises shortly and we will target larger cities all across the United States of America and Canada.

  • Exposure to economic downturns may impact the ability of borrowers to repay loans and the value of collateral.
  • Changes in regulations related to lending, interest rates, or real estate transactions could impact business operations.
  • Intense competition from other hard money lenders, traditional financial institutions, or alternative financing options.
  • Fluctuations in interest rates may affect the cost of capital and the attractiveness of hard money loans for borrowers.

i. Who are the Major Competitors?

  • LendingHome
  • Lima One Capital
  • CoreVest Finance
  • Patch of Land
  • RCN Capital
  • Anchor Loans
  • Walnut Street Finance
  • Temple View Capital
  • Do Hard Money
  • ABL (Asset Based Lending)
  • Sherman Bridge Lending
  • Zeus Mortgage
  • BridgeWell Capital
  • Kennedy Funding Financial
  • Socotra Capital
  • Visio Lending
  • Stratton Equities
  • Streamline Funding
  • Center Street Lending.

ii. Is There a Franchise for Hard Money Lending Business?

No, there are no franchise opportunities for hard money lending businesses.

iii. Are There Policies, Regulations, or Zoning Laws Affecting Hard Money Lending Business?

Yes, there are various policies, regulations, and zoning laws that can affect the operation of hard money lending businesses in the United States.

However, it is important to note that the regulatory environment may vary by state, and new regulations can be introduced or existing ones amended.

Each state has its usury laws that dictate the maximum interest rate a lender can charge. Hard money lenders must be aware of and comply with these laws to avoid legal issues.

Federal law requires lenders to disclose key terms and costs of a loan to borrowers. Compliance with the Truth in Lending Act (TILA) is crucial for transparency in lending practices.

Dodd-Frank Wall Street Reform and Consumer Protection Act (this federal law) introduced regulations aimed at preventing predatory lending practices and ensuring consumer protection. Some provisions of Dodd-Frank may impact hard money lending activities.

Lenders are required to implement Anti-Money Laundering (AML) programs to detect and prevent money laundering activities.

Compliance with Anti-Money Laundering (AML) regulations is crucial for financial institutions, including hard money lenders.

Zoning regulations can impact the use of properties as collateral. Hard money lenders should be aware of local zoning laws to assess the feasibility of real estate projects.

Laws such as the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act prohibit discrimination in lending practices. Hard money lenders need to ensure that their lending decisions comply with fair lending laws.

If a hard money loan is considered a security, it may be subject to federal and state securities laws. Understanding these regulations is important to ensure compliance.

Marketing Plan

A. who is your target audience.

i. Age Range: 18 to 65 years old, with a focus on adults aged 25 to 55 who may require short-term financial assistance.

ii. Level of Education: Minimum high school education; preference for those with some college education or vocational training.

iii. Income Level: Middle to high-income individuals or businesses with the financial capacity for real estate investment or development projects.

iv. Ethnicity: No specific ethnic targeting; services available to a diverse range of individuals and businesses.

v. Language: English proficiency is preferred due to the nature of legal and financial transactions.

vi. Geographical Location: Primarily focused on the Detroit metropolitan area, but may consider opportunities in other strategic real estate markets within the United States.

vii. Lifestyle: Targeting real estate investors, developers, and businesses with an entrepreneurial mindset.

b. Advertising and Promotion Strategies

  • Use FOMO to Run Photo Promotions.
  • Share Your Events in Local Groups and Pages.
  • Turn Your Social Media Channels into a Resource
  • Host Themed Events That Catch Attention.
  • Tap Into Text Marketing.
  • Develop Your Business Directory Profiles
  • Build Relationships with Other Businesses in our Area

i. Traditional Marketing Strategies

  • Broadcast Marketing -Television & Radio Channels.
  • Marketing through Direct Mail.
  • Print Media Marketing – Newspapers & Magazines.
  • Out-of-Home” marketing (OOH marketing) – Public Transits like Buses and Trains, Billboards, Street Furniture, and Cabs.
  • Direct sales, direct mail (postcards, brochures, letters, fliers), tradeshows, print advertising (magazines, newspapers, coupon books, billboards), referral (also known as word-of-mouth marketing), radio, and television.

ii. Digital Marketing Strategies

  • Social Media Marketing Platforms.
  • Influencer Marketing.
  • Email Marketing.
  • Content Marketing.
  • Search Engine Optimization (SEO) Marketing.
  • Pay-per-click (PPC).
  • Affiliate Marketing
  • Mobile Marketing.

iii. Social Media Marketing Plan

  • Create a personalized experience for our customers.
  • Create an efficient content marketing strategy.
  • Create a community for our audience.
  • Start using chatbots.
  • Gear up our profiles with a diverse content strategy.
  • Use brand advocates.
  • Create profiles on the relevant social media channels.
  • Run cross-channel campaigns.

c. Pricing Strategy

Jared Moore® Hard Money Lending, Inc. employs a competitive pricing strategy, offering interest rates and fees that align with market standards. Our transparent and straightforward fee structure ensures clarity for borrowers, fostering trust and satisfaction.

While rates may reflect the risk associated with collateral-based lending, our commitment to flexibility allows for tailored solutions, accommodating the diverse financial needs of real estate investors and developers.

Sales and Distribution Plan

A. sales channels.

Jared Moore® Hard Money Lending, Inc. maximizes its market reach through a multi-faceted sales approach. Our primary channels include a robust online platform for loan applications, providing clients with convenient access and rapid response times.

Additionally, our seasoned team of relationship managers actively engages with real estate professionals, attending industry events and networking to build strategic partnerships.

We leverage digital marketing to enhance brand visibility and attract potential borrowers. Emphasizing a client-centric approach, our sales channels aim to offer personalized service, comprehensive information, and efficient processes, ensuring a seamless experience for real estate investors and developers seeking tailored hard money lending solutions.

b. Inventory Strategy

Jared Moore® Hard Money Lending, Inc. optimizes its inventory strategy by maintaining a diverse portfolio of collateralized assets, predominantly focusing on real estate properties. Rigorous due diligence ensures the quality and market potential of the assets.

We proactively monitor market trends and adjust our inventory to align with emerging opportunities and mitigate risks. The strategy includes a careful balance between risk and return, allowing us to adapt to evolving market conditions.

c. Payment Options for Customers

  • Bank Transfers
  • Credit or Debit Card
  • Electronic Payment Systems such as PayPal or Venmo.

d. Return Policy, Incentives and Guarantees

Return policy:.

Jared Moore® Hard Money Lending, Inc. is committed to transparency and fair dealings. Our return policy is aligned with industry standards, specifying interest rates and fees.

In the event of loan prepayment or early settlement, borrowers benefit from a pro-rata interest adjustment, ensuring equitable terms. We prioritize flexibility, allowing borrowers to explore refinancing options if their financial circumstances change.

Incentives:

To reward our valued clients, Jared Moore® Hard Money Lending, Inc. offers competitive incentives, including reduced fees for repeat borrowers and favorable terms for long-term partnerships. Our loyalty program aims to recognize and appreciate the trust placed in our services, fostering enduring relationships.

Guarantees:

Jared Moore® Hard Money Lending, Inc. assures a commitment to ethical lending practices. Our guarantees include transparent communication, adherence to regulatory requirements, and diligent risk management.

We guarantee a client-focused approach, ensuring that each borrower receives personalized attention and tailored solutions.

While we mitigate risks through thorough due diligence, our commitment to resolving issues promptly underscores our dedication to client satisfaction.

c. Customer Support Strategy

Jared Moore® Hard Money Lending, Inc. prioritizes an unwavering commitment to customer support, aiming for excellence in every interaction.

Our strategy revolves around accessibility, offering multiple communication channels for swift responses to inquiries or concerns.

A dedicated team of knowledgeable and empathetic customer service representatives ensures a seamless experience throughout the lending process.

We proactively engage with clients, providing regular updates and fostering open communication. Embracing a client-centric ethos, we prioritize problem resolution, aiming for customer satisfaction and trust.

Continuous feedback mechanisms and personalized assistance underscore our dedication to delivering a superior customer support experience.

Operational Plan

Jared Moore® Hard Money Lending, Inc. executes a comprehensive operational plan to ensure efficiency and excellence in hard money lending.

Central to our strategy is the seamless integration of technology, automating processes for quick approvals, and streamlined transactions.

Rigorous risk management protocols guide our lending decisions, emphasizing thorough due diligence on collateral and borrowers.

Our skilled team of professionals, specializing in real estate and finance, implements market-responsive strategies. Regular training programs ensure staff expertise in evolving industry trends.

Focused on compliance, we adapt swiftly to regulatory changes. This operational agility, combined with a commitment to transparency, positions us to deliver tailored and secure lending solutions, fostering success for our clients.

a. What Happens During a Typical Day at a Hard Money Lending Business?

A typical day at Jared Moore® Hard Money Lending, Inc. involves a dynamic blend of activities. The team engages in market research to stay abreast of real estate trends, assesses potential projects, and conducts due diligence on collateral and borrowers.

Loan processing is streamlined through technology, facilitating quick approvals. Relationship managers actively collaborate with clients and industry professionals, attending to inquiries and fostering partnerships.

The day includes adherence to regulatory requirements, risk management reviews, and team training to maintain expertise. Each day revolves around efficient, client-centric operations, driving success in hard money lending.

b. Production Process

There is no production process.

c. Service Procedure

Jared Moore® Hard Money Lending, Inc. executes a streamlined service procedure to ensure a seamless experience for clients. The process is initiated with an intuitive online application, leveraging technology for swift initial assessments.

Thorough due diligence follows, with our team conducting rigorous collateral and borrower evaluations. Transparent communication is paramount, providing clients with regular updates on their loan status.

Upon approval, funds are disbursed promptly. Throughout the lifecycle, dedicated relationship managers offer personalized support, addressing inquiries and fostering strong client relationships.

Our service procedure prioritizes efficiency, transparency, and client satisfaction, positioning Jared Moore® as a trusted partner in facilitating the financial success of real estate investors and developers.

d. The Supply Chain

Jared Moore® Hard Money Lending, Inc. has an efficient supply chain focused on financial services. Our sourcing involves strategic partnerships, and utilizing technology for streamlined loan processing.

Emphasizing transparency and adaptability, our supply chain ensures the swift and secure provision of hard money lending solutions, positioning us as a reliable financial partner for real estate investors and developers.

e. Sources of Income

The sources of income for Jared Moore® Hard Money Lending, Inc. are primarily generated through the following avenues:

  • Interest Rates
  • Late Payment Fees
  • Loan Renewal Fees
  • Repossession and Sale of Collateral
  • Default Interest and Penalties
  • Volume of Loans.

Financial Plan

A. amount needed to start your hard money lending company business.

Jared Moore® Hard Money Lending, Inc. would need an estimate of $15 million to successfully set up our hard money lending company in the United States of America. Note that this amount includes the salaries of all the staff for the first month of operation.

b. What are the Costs Involved?

  • Business Registration Fees – $750.
  • Legal expenses for obtaining licenses and permits – $2,300.
  • Marketing, Branding, and Promotions – $5,000.
  • Business Consultant Fee – $2,500.
  • Insurance – $15,400.
  • Rent/Lease – $120,000.
  • Other start-up expenses including, commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($2,800).
  • Operational Cost (salaries of employees, payments of bills et al) – $40,000
  • Working Capital – $14 million
  • Store Equipment (cash register, security, ventilation, signage) – $4,750
  • Website: $600
  • Opening party: $3,000
  • Miscellaneous: $2,000

c. Do You Need to Build a Facility? If YES, How Much Will It Cost?

Jared Moore® Hard Money Lending, Inc. will not build a new facility for our hard money lending company.

d. What are the Ongoing Expenses for Running a Hard Money Lending Business?

  • Employee compensation, including salaries, wages, and benefits for loan officers.
  • Monthly rent or lease payments for storefront locations or office space where the business operates.
  • Expenses related to marketing campaigns, advertising materials, online advertising, and community outreach efforts to attract and retain customers.
  • Costs associated with utilities, such as electricity, water, and internet services, as well as office supplies like paper, ink, and office equipment maintenance.
  • Subscription fees or licensing costs for loan management software and ongoing IT services.
  • Expenses for legal counsel, compliance experts, and regulatory consultants to ensure compliance with state and federal lending regulations.
  • Insurance coverage to protect against potential losses, including liability insurance and insurance on repossessed property or collateral.
  • Fees for property appraisal and inspection services
  • Expenses associated with repossessing property, including auction fees, in cases of loan default.
  • Costs associated with obtaining and renewing business licenses, permits, and regulatory fees required to operate legally within a state.

e. What is the Average Salary of Your Staff?

  • Chief Operating Officer (Owner) – $85,000 Per Year
  • General Manager – $65,000 Per Year
  • Compliance Officer – $58,000 Per Year
  • Accountant – $50,000 Per Year
  • Loan Advisors (Loan Officers) – $55,000 Per Year
  • Sales and Marketing Officer – $35,000 Per Year
  • Customer Service Representative – $34,100 Per Year

f. How Do You Get Funding to Start a Hard Money Lending Business?

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
  • Source for soft loans from your family members and friends.

Financial Projection

A. how much should you charge for your product/service.

Hard money lending businesses typically charge borrowers through interest rates and fees. The exact amount a hard money lending business charges can vary widely depending on various factors, including state regulations, the loan amount, the value of the property used as collateral, and the specific terms negotiated between the lender and the borrower.

Note that hard money lending interest rates are often stated as an annual percentage rate (APR). The APR can vary significantly but is generally higher than traditional loans. It is not uncommon for hard money lending APRs to range from 100% to 300% or more.

b. Sales Forecast?

Jared Moore® Hard Money Lending, Inc. anticipates steady growth in loan originations and profitability over the next three years.

Our financial projections are based on a prudent risk management approach and a commitment to maintaining a strong and diversified portfolio of collateralized assets.

  • First Fiscal Year (FY1): $4 million
  • Second Fiscal Year (FY2): $7 million
  • Third Fiscal Year (FY3): $10 million

c. Estimated Profit You Will Make a Year?

Jared Moore® Hard Money Lending, Inc. is projecting to make.

  • First Fiscal Year (FY1): (5% of revenue generated)
  • Second Fiscal Year (FY2): (15% of revenue generated)
  • Third Fiscal Year (FY3): (20% of revenue generated)

d. Profit Margin of a Hard Money Lending Company Business 

The profit margin of a hard money lending company business is not fixed. It could range from 5 percent to 20 percent depending on some unique factors.

Growth Plan

A. how do you intend to grow and expand by opening more retail outlets/offices or selling a franchise.

Jared Moore® Hard Money Lending, Inc. will grow our hard money lending company by first opening other outlets in key cities in the United States of America, and Canada within the first seven years of establishing the business and then will start selling franchises from the seventh year.

b. Where do you intend to expand to and why?

Jared Moore® Hard Money Lending, Inc. plans to expand to

  • Portland, Oregon
  • Minneapolis, Minnesota
  • Denver, Colorado
  • Tampa, Florida
  • San Diego, California
  • Nashville, Tennessee
  • Charlotte, North Carolina
  • Phoenix, Arizona
  • Dallas, Texas
  • Atlanta, Georgia.

Internationally, we plan to expand to Canada. The reason we intend to expand to these geographic locations is the fact that available statistics show that the cities listed above have a growing market for hard money lending businesses.

Jared Moore® Hard Money Lending, Inc. plans to exit the business via family succession. We have positioned structures and processes in place that will help us achieve our plan of successfully transferring the business from one family member to another and from one generation to another without difficulties.

The company has successfully developed a detailed transition plan to smoothly hand over responsibilities to the new successor.

This includes transferring ownership, training key personnel, and communicating with employees, customers, and suppliers about the change.