The Merriam-Webster online dictionary defines difficult as:

1 a: does not penetrate easily: does not yield easily to pressure b of cheese: cannot be spread: very firm.

2 a: liquor (1): harsh or acid taste (2): strongly alcoholic b: characterized by the presence of salts (such as calcium or magnesium) that prevents the formation of foam with soap, that is, hard water.

3 a: of or related to radiation of relatively high penetrating power: having high energy hard X-rays b: having or producing relatively large photographic contrast, that is, strong negative.

4 a: metallic unlike paper money b: currency: convertible into gold: stable in value c: usable as currency, that is, paid in cash. d: currency: easily acceptable in international trade e: be high and firm, that is, hard prices.

5 a: stiff and tightly twisted threads, that is, hard. b: have a smooth and closed finish without a nap, that is, a hard hairstyle.

6 a: in good physical shape, that is, in good condition. b: resistant to stress or disease c: free from weakness or defects.

7th (1): firm, definite, hard agreement reached. (2) – Not speculative or conjectural – Strong objective evidence (3) – Important or informative rather than sensational or entertaining, i.e. hard news. b: close search, that is, gave a hard look. c: free from sentimentality or illusion: realistic, that is, common sense. d: unresponsiveness: stubborn insensitivity, that is, a hard heart.

8 to (1): hard to bear or bear, that is, bad luck or hard times. (2): Oppressive and unfair sales taxes are hard on the poor.

9 a: characterized by a sharp or hard outline, a rigid execution and a rigid pattern b: very defined: rigid shadows, that is, hard.

10 to (1): difficult to achieve or solve: problematic, that is, difficult problems.

As used in this article, hard money is intended to convey the idea that due to current economic conditions, many financing needs will be more difficult to meet. They will require a great deal of effort and effort to overcome the economic hurdles of today’s economy. Compared to 2006 and 2007, periods of relatively easy money, to obtain financing today you will need to have hard, defined data to support your financing needs. And the cost of money will be harder to bear. Hard money is harder to find, harder to get, and harder to pay back. However, hard money can be an economic necessity as a means of growing a business or completing a real estate transaction.

Why is 2008 a time of big money? This is a difficult question to answer. If you ask 3 experts, you will probably get three different answers. It may be the economic equivalent of The Perfect Storm, a true story of men against the sea. The phrase “perfect storm” refers to the simultaneous occurrence of events that, taken individually, would likely be far less powerful than the result of their rare combination. These events are rare by their very nature, so even a small change in any event that contributes to the perfect storm would lessen its overall impact. The 1929 stock market crash and the ensuing depression exemplify a perfect storm of economic fallout.

What are these events today? 1) The mortgage collapse. The major financial institutions in the United States are incurring billions of dollars in losses due to the loss in valuation of their investments in mortgage securities. The consequence for borrowers is that these institutions are less inclined to take risks when they lend money for fear of additional losses. And its regulators require regulated lenders to raise their credit standards in order for borrowers to qualify for a loan. 2) The devaluation of the US dollar against other world currencies. The United States government is spending gargantuan amounts of money in excess of what it collects in revenue due to the political compulsion to spend taxpayers’ money, the war in Iraq, Hurricane Katrina (and other natural disasters), and the war on The terrorism. This makes our currency less valuable. It makes importing into the United States more expensive. The American people have less money to spend on goods and services, and their money buys less than a year ago because the prices of basic necessities like gasoline are higher. 3) The current trend of the federal and state governments to reduce funding for social services, health services and education due to inadequate revenues; This hurts people and businesses who have less money to spend on products and services, creating additional obstacles to our economy. 4) The decline in the value of residential real estate throughout the United States. This is related to the collapse of mortgages and the fact that many people incurred debts that they cannot pay. The actual causes of these events are complicated and beyond the scope of this article. Suffice it to say, these are tough times and tough times create hard money loan needs.

What exactly is hard money? Here are seven examples:

1) A commercial real estate loan where the borrower receives funds based on the property’s value, usually 50% or less, at an interest rate higher than what a bank would charge. This is the most commonly understood type of hard money. In this financing, neither the property income nor the borrower demonstrably supports the repayment of the loan.

2) A real estate loan to buy a residential property where the borrower cannot prove income. This can be achieved with financing from a seller, the only party willing to bear the risk of default.

3) A small minor lien on income producing commercial real estate where the first lien is very large. For example, a second million dollar link behind a first ten million dollar link. Most lenders simply do not want to consider such a loan due to possible first lien liability. It is ten times the risk of the secondary loan.

4) Most loans to people with less than excellent credit. Many loans are based on your credit rating. If you don’t have a high enough credit score for the lender’s requirements, you simply don’t get your loan, and you may or may not be able to find a hard money loan to accomplish your goal.

5) Financing accounts receivable from construction contractors, medical providers, and sellers of agricultural products. Most factors are not offered to these sectors of the economy due to the risks and complexities that are involved.

6) Financing of purchase orders for items with gross margins less than twenty percent. The twenty percent margin is a benchmark of sufficient profitability on a transaction to pay all financing costs and generate profit for the business after all costs have been paid. During tough economic times, margins shrink. It is a vicious circle.

7) Loans to companies particularly negatively affected by the current economy. For example, a loan to build a new lumber yard is affected by the recession in new real estate construction and a decreased need for lumber. Most banks would simply refuse to consider such a loan. The same is true for developers looking to build new housing areas or office building developments. This is not a good time to try to start a new mortgage brokerage business; although it may be a good time to be a strong money lender as long as you are very, very careful when evaluating your transactional risks.

What do all these situations have in common? In times of easy money, these situations would be less expensive to fund and more likely to receive funds. Today, the lender’s response to your request for financing is more likely to be a courteous but forceful “no at all.” Many lenders have effectively (if not really) closed their doors. Many lenders will simply refuse to lend at hotels / motels, gas stations, owner / user properties, properties with environmental problems. Borrowers who do not have FICO credit scores above 680, with substantial net worth and income, will find many types of loans very difficult to obtain. Fortunately, the door to accounts receivable financing is still wide open.

The bottom line: Tough times in our economy will tend to force more people and businesses to borrow money, if they can get any money at all. Hard money trade finance will tend to grow as traditional sources of finance from banks and institutional lenders will simply not be available.