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.
"Hard money" is a term that is used almost exclusively in the United States and Canada, where these types of loans are most common.
In March 2022, the National Private Lenders Association (NPLA), a trade group representing the industry, passed an official resolution encouraging industry participants to no longer use the term “hard money,” and instead use terms like “private lending,” “bridge lending” and “transitional lending.”[5] Through this resolution, the NPLA confirmed its commitment to supporting the cessation of the use of the term “hard money” to describe the lenders or products in the industry.
In addition, the American Association of Private Lenders (AAPL), another industry trade group, published an article, “The Demise of ‘Hard Money’ in a Private Lending World,” highlighting the group’s efforts since its inception to minimize the use of the hard money term.
The reason for this expansion is primarily due to the strict regulation put on banks and lenders in the mortgage qualification process.