The intersection of hard money and lawsuit loans
At first glance they might seem to be from two different worlds, but since HM Capital is now offering both — you might be surprised to know they are more similar than you think!
They are both types of creative financing between two consenting parties
When investors can’t get approved with traditional financing — hard money lenders come into the picture. Private lenders are willing to take more risk in return of higher interest rate and overall returns.
Lawsuit loans are not very different — when plaintiffs with a personal injury lawsuit need cash and cannot wait for their settlement in 2 years — investors are willing to provide them with a pre-settlement cash advance in return for a larger payback in the future.
The lack of easily available credit in the US presents challenges to people who need $500–1000, or for those who want to purchase an investment property in order to make a few bucks.
The lenders in both are private parties
Private lenders who offer hard money and legal funders are both private parties — bot large banks or institutions. The underwriting is done in-house, and in all likelihood — those are smaller operations, people you can talk to. The smaller scale and flexibility (and less regulatory red tape) allow those creative lender to take greater risks (and charge more for it).
You can get funded in just a few days
If you tried getting a home loan — it will probably take you 30–60 days to get approved. If you wait for your case to settle — it might take you 18–24 months. Most people can’t wait for that. Real estate deals sometimes need all-cash offers and investors who are not that liquid need hard money in order to close in 10 days.
Similarly, plaintiffs with a good car accident case that need $5,000 right away cannot afford to wait for their case to settle. Or worse — force their lawyer to settle for pennies on the dollar now instead of litigating the case through.
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