Top 5 Alternatives to Hard Money Lenders for EMD Financing

The requirement to pay earnest money deposits for commercial real estate is not going anywhere. 

CRE developers are already embracing this reality. Many of them now offer to pay higher earnest money deposits (EMD) to gain an advantage in competitive markets. 

Smart CRE investors must secure an earnest money deposit (EMD) financing source so they don’t miss out on good deals when they are temporarily illiquid. 

Hard money lenders are an option. However, though they are accessible (short turnaround, no credit check), they charge high interest rates and require collateral.  

Thankfully, there are earnest money financing providers that are as accessible but with lower financing fees and no collateral requirement. 

We consider five of them in this article. 

1. Duckfund

Duckfund is a financing company that provides EMD financing for developers. It also supports them with equity and debt financing for pre-development, development, and value-add projects across major US states and the Sun Belt. 

Best known for: 

Duckfund is best known for supporting developers who operate in competitive markets. 

Key advantages: 

• Fast application: You can complete the application process in two minutes.

• Quick funds disbursal: Duckfund will release funds within 48 hours of approval. 

• Transparent fees: Duckfund does not charge any hidden fees; developers will get a single fee quote (as a % of the deposit amount). 

• Discount for developers: After the fourth month of the due diligence period, developers will pay a discounted fee from what they paid in the first three months. 

• No maximum EMD amount: The minimum amount is $50,000, but there is no maximum. Duckfund will provide larger EMDs for developers in competitive markets who need them to gain an advantage.  

• Multiple deals: You can get EMD financing for multiple simultaneous deals,  

Ideal for: 

Duckfund is ideal for developers in competitive markets since they usually need quick access to larger EMD amounts. 

2. Y2 Lending

Y2 Lending is a private money lender that provides earnest money deposit financing, in addition to gap funding, fix-and-flip funding, and proof-of-funds financing. 

Best known for: 

Y2 Lending is best known for its focus on building long-term relationships with its clients. 

Key advantages: 

• Accessibility: They only require the purchase agreement with the seller –  no collateral, credit checks, or pay stubs.

The maximum funding available is $50,000, and the financing fee is between 15% and 30% of the EMD amount.  

• Quick funding: They can release funds to the escrow within 24 hours of application approval. 

• Flexible financing term: The standard term is 30 days, but you can negotiate for up to 45 days. 

Ideal for: 

Y2 Lending is ideal for developers who need only small EMDs. 

3. Oakstone Lending

Oakstone Lending is a transactional lender that provides EMD financing, double closings, and seller carryback funding. 

Best known for: 

Oakstone Lending is best known for quick fund disbursal.  

Key advantages: 

• Low minimum funding: The minimum amount that Oakstone Lending supports is $1,000. 

• Accessibility: They only require that the purchase agreement include the necessary contingencies – no credit checks or collateral. 

• Speed: They release funds within 48 hours of approval. 

• Small upfront fee: The upfront fee is $250. However, they demand a return equal to the higher of $2,000 and 40% of the deal. 

Ideal for: 

Oakstone Lending is ideal for developers who need quick access to small EMD amounts.

4. Truss Financial

Truss Financial is a private lending company that provides earnest money deposits financing, bridge loans, proof-of-funds funding, and pre-receivables financing. 

Best known for: 

Truss Financial is best known for its flexibility. 

Key advantages: 

• Flexible fees: The fees are variable; they depend on how well you can negotiate with them. 

• Flexible financing term: You can also negotiate a longer financing term. 

• Accessibility: They do not require collateral or a credit check.  

Ideal for: 

Truss Financial is ideal for developers who are good at negotiating financing deals. 

5. AdvanceDeposit

AdvanceDeposit is a financing company that focuses exclusively on earnest money deposits.  

Best known for: 

AdvanceDeposit is best known for its low financing fees. 

Key advantages: 

• Fast disbursal: AdvanceDeposit disburses funds to the escrow within 72 hours. 

• Low fees: Its 1% financing fee is low. However, there are additional legal and processing rates with no specified rate. 

• Flexible financing term: There is no stated limit to the financing term they support. 

• Wide range of funding amounts: The minimum amount is $50,000, while the maximum is $20 million. 

• Accessibility: They do not require collateral or a credit check. 

Ideal for: 

AdvanceDeposit is ideal for developers seeking low-cost and quick earnest money deposit financing. 

Final thoughts

Duckfund provides the best of all worlds. 

Its application process is fast, and funds can be disbursed within 48 hours. Also, it supports a financing term of 90 days, which is rare among EMD financing companies. 

Furthermore, it charges only a single transparent fee (no hidden charges), and it does not require collateral or a credit check. 

Also, it is flexible enough to support the EMD requirement of developers operating in competitive markets by providing larger amounts when required.

Finally, Duckfund supports multiple simultaneous deals. With this, you can pursue multiple deals at once and build a profitable portfolio.