Ending the Use of the Term “Hard Money”
Authored by John Beacham, CEO of Toorak Capital Partners.
The Resolution encourages all those associated with Private Lending to cease using the term “Hard Money” and use alternative terms, such as Private Lending, Bridge Lending, and Transactional Funding. The resolution passed by a unanimous vote from the members at the March 27, 2022 Membership Meeting in Key Biscayne, Florida.
The adopted Resolution is as follows.
A Resolution, Encouraging the End of the Term “Hard Money”
The membership of the National Private Lenders Association (“NPLA”), in general meeting, hereby adopt the following recitals and resolutions:
WHEREAS, the term “hard money” has been used historically to describe certain lenders and lending products in the private lending industry;
WHEREAS, such term is associated in the minds of many with high interest rates, unfavorable loan terms, lenders who re-trade loan terms, “loan to own” lenders, slow and inefficient draw funding, hidden fees / borrower charges and other unsavory business practices;
WHEREAS, such term unfairly associates the private lending industry with lenders of last resort including, payday lenders, check advance, pawn shops, and others;
WHEREAS, the private lending industry is a competitive market with many high-quality lenders who provide funding to sophisticated borrowers, which is used to improve and finance housing and other commercial real estate across our country. The industry fills a critical need by providing the type of financing that traditional real estate lenders are not set up to offer;
WHEREAS, the NPLA has proudly established a code of ethics in order to professionalize and elevate the practices of its members;
WHEREAS, the NPLA, in order to improve the perception of the private lending industry and reflecting its professionalism and institutionalization, desires to transition away from the use of the phrase “hard money” in favor of alternative terms such as bridge lending, private lending or transitional lending.
RESOLVED, that the NPLA shall support an initiative to promote the cessation of the use of the term “hard money” to describe the lenders or products in our industry;
RESOLVED FURTHER, that the NPLA shall publicly state and promote the reasons for the change on its website, social media, and other appropriate venues;
RESOLVED FURTHER, that all members of the NPLA are hereby urged to use their best efforts to cease using the term “hard money” to describe themselves, their products or our industry in their websites, marketing materials, verbal communications and other outward facing marketing materials and instead use the terms “bridge lending”, “private lending”, “transitional lending” and other similar terms;
RESOLVED FURTHER, that all members of the NPLA are urged to educate their borrowers and the public on the transition away from the term “hard money,” including the reasons that the industry does not believe that this term appropriately describes the practices of the members of the NPLA, and other high-quality lenders.
John Beacham is the CEO of Nationwide Capital Provider, Toorak Capital Partners, and a Member of the National Private Lenders Association.