Consumer confidence is vital for our economy and when consumers cut back, that means that sales slow to a trickle. When sales slow, that means companies cut back, have fewer hires and simply do not need the inventory, materials or money to invest in new equipment. When this happens small businesses feel the pain as much or more than large corporations.

When Big companies watch sales plummet or profits drop, it affects stock price and that means it's time to cut costs; the biggest cost is labor. That means layoffs and it means they must be careful of expenditures, so they tighten up on collections and terms and pay their bills slower. Often, corporations string out the little guy, the small business person and all the little small business people become literally banks, as they wait for their checks "in the mail" so they can pay their bills and employees too.

Of course, small business people operate on narrow margins and must pay employees and when they can't, they must let them go, this means job losses too. But did you know that small businesses employ 2/3 of the work force in America. And when small businesses cut back, that means they are not expanding, and there are fewer applications at the banks for business loans, even when the interest rates are very low, like they are now.

Currently, this is the situation, commercial loans and small business loan applications are very low. Why? Well, for all the reasons above, plus the small business confidence level is equal or sometimes even less than that of the consumer.

is a specific type of asset-based loan financing in which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.

Many hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 65-70%. That is, if the property is worth $100,000, the lender would advance $65,000-70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.