A hard money loan is a type of short-term financing backed by collateral instead of your personal credit history. Hard money loans are used for the purchase of investment property and are made by private investors or lending companies. Hard money loans come with higher interest rates compared to traditional bank loans. Such loans are usually shorter in terms lasting only 12 months. However, borrowers may be able to extend the loan for an additional 12 months if needed. While hard money loans can be a more expensive option, they can be a good choice for borrowers who need fast access to funding.