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Hard Money Lender vs Private Money Lender

By November 25, 2021December 30th, 2021Blog, Hard Money Loans Los Angeles
Hard Money Loans Los Angeles

The term “hard money loan” is fairly broad and covers an array of different options that exist within the world of private financing. Hence, it is fairly common for people to use the terms “hard money” and “private money” interchangeably when applying for financing with a hard money lender in Los Angeles.

It is true that hard money loans and private money loans are similar, but there are also important distinctions you should be aware of when considering which loan type is best for you. Before discussing the similarities and differences between these loan offerings, let’s cover some basics:

Hard Money Loans

Hard money loans are offered by hard money lenders that are part of a non-traditional money lending community. Essentially, hard money lenders make financing available in the form of a hard money loan but focus on other criterion when deciding whether to approve a funding application.For example, hard money lenders tend to focus more on the potential value of a property, the plans provided by the applicant to fix and flip a property, and other non-traditional factors when deciding whether to help fund a real estate investment. This is in stark contrast to a traditional bank that usually focuses on an applicant’s credit score, liquidity, and so forth.

If you obtain a hard money loan from a hard money lender in Los Angeles, the lender will record the debt instrument against the property. This debt instrument is known as a “deed of trust” in California.

Private Money Loans

Private money lenders, as the name implies, offer privately financed loans to investors. Since the financing is provided by a private source, there is often no record of any actual debt instrument. When it comes to working with a private lender, the key to securing financing is having a strong, transparent relationship with the lender.


Hard money loans and private money loans share many similarities, including:

  • Both loan types fall within the orbit of non-traditional lending
  • Both loan types are powered by the strength of real estate purchase
  • Both loan types are shorter in duration when compared to the funding options provided by traditional banking institutions.


The notable differences between hard money loans and private money loans include the following:

  • Hard money lenders in Los Angeles , and elsewhere in the United States, typically must be licensed to conduct business and offer financing. This is not the case when it comes to a private investor.
  • It is common for hard money loans to have an agreed upon loan durations and interest rate. In contrast, if you obtain a private money loan, there is the chance that nothing is pre-defined, and the terms can be modified based on the whims of the private lender.

Have Questions? Contact a Reputable Hard Money Lender in Los Angeles Today

If you are looking to secure non-traditional financing for your real estate project, contact the reputable and respected hard money lenders at PB Financial Group. PB Financial Group is a premier direct hard money, private money, and bridge lender, who has been providing quick funding since 2006 and have funded over 2700 hard money/private money loans.Our objective is to work to satisfy your financing needs on important real estate projects throughout California in an efficient and effective manner.

To learn more about how to finance your next real estate venture, please contact PB Financial Group, at 877.700.3707 to schedule a consultation or visit to learn more.

PB Financial NMLS #357614/DRE #01522495

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