What's the difference between hard money and asset-based private lending?

Question

Turnrow Capital · Accepted Answer

The mechanics overlap — both lend on the asset, fast, without tax returns. The differences are price, intent, and behavior at maturity. Classic hard money runs the highest rates with heavy points, often on distress. Asset-based private lenders like Turnrow price below hard money and underwrite the exit, not the foreclosure.

"Hard money" grew up in urban fix-and-flip, where speed excuses almost any price: high double-digit rates, 3–5 points, six-month terms, and default interest clauses that assume some borrowers will fail. Some hard money shops are effectively loan-to-own — comfortable foreclosing because the collateral at 50% LTV is the real business model.

A specialized asset-based ag lender shares the speed and the no-doc underwriting but differs in posture. Terms run 12–36 months instead of 6, pricing sits meaningfully below hard money, and underwriting starts with the question hard money skips: what is the realistic exit — refinance, sale, or harvest proceeds — and does the structure give it room to happen?

How to tell which one you are talking to: ask about default interest rates, extension fees, and what happens at maturity if the refinance takes 60 extra days. A lender who answers in specifics and structures for the exit is asset-based. A lender who shrugs and points at the collateral is hard money — usable in a pinch, but read every clause.