Hard Money vs. Soft Money
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Hard Money Vs. Soft Money
Hard and soft money is used to refer to paper money or coin money. They also refer to contributions that all politicians welcome with open arms during an election cycle. Hard money is the loan that is used for specific needs and with criteria for paying it back, whereas, soft money is the loan without any specific intention or use. There are more hard money lenders as compared to soft money. Hard money donations are limited to a specific amount; on the other hand, there is no limit for soft money donations. Moreover, only private individuals can donate in case of hard money, on the flip side, soft money may include any type of donors like corporations, labor unions, and private individuals, etc.
What is Hard Money?
Hard money is the loan that is used for specific needs and with criteria for paying it back. If a person needs a long term loan, he should choose hard money. Hard money loans are asset-based financing where the borrower gets money, and the funds of the lender are secured by the property. It is given under strict rules and regulations by the government on the basis of the property. It is limited to a specific amount and requires less paperwork while closing.
What is Soft Money?
This is the type of loan without any specific intention or use. It is mostly used by short term purposes. Soft money is the type of asset-based financing that includes both the method of hard money plus the old convention of loans. As soft money is given on the basis of credit score, so the risk is lower in this case. It is easy to acquire soft money because there are no specific rules and regulations in it.