New Tariffs Are Raising Construction Costs — Here’s Why Hard Money

The latest round of U.S. tariffs on imported building materials is already shaking up the construction industry—and construction hard money lenders are moving to the center of the action.

These tariffs, targeting steel, aluminum, lumber, and industrial components, are creating immediate cost spikes and longer lead times for developers across the country. With tighter bank lending and rising financial pressure, many builders are left scrambling for funding that can actually keep up.

Tariffs = Higher Prices = Bigger Capital Gaps

Let’s be clear: construction has never been cheap—but new tariffs are sending costs into overdrive.

• Lumber: Up 15–20% in some markets.
• Steel: Seeing volatile surges tied to tariff announcements.
• Electrical & Mechanical Parts: Delays and markups due to reduced imports.

For developers mid-project or about to break ground, this means one thing: their current financing just became outdated. Budgets are busted. And traditional lenders? They’re not moving fast enough.
construction hard money lenders

The Role of Construction Hard Money Lenders Right Now

This is where construction hard money lenders become not just helpful—but critical.

Why?

1. Speed Matters Now More Than EverDevelopers facing sudden cost increases can’t wait 60 days for a bank to make a decision. Hard money lenders can fund in days, not months.
2. Flexibility in the Face of ChangeWith material costs fluctuating, builders need lenders who understand that a budget today might not be a budget tomorrow. Hard money is nimble enough to roll with that uncertainty.
3. Bridge the New Capital GapBanks will lend 60-70% of the original project cost—not the inflated post-tariff cost. Hard money lenders can fill the difference, often as a second position or mezzanine loan.

The Risk Factor: Know What You’re Lending Into

Of course, not every opportunity is a good one.
Hard money lenders must:

• Underwrite conservatively with updated material cost estimates.
• Analyze developer experience—is this someone who can handle curveballs?
• Structure deals with cushions for budget overruns and timeline delays.

The goal is to lend smarter, not just faster.

The Bigger Picture

This isn’t a temporary blip—tariff-driven inflation in construction may stick around. The developers who survive will be the ones who adapt fast. The lenders who win will be those who provide capital when it’s needed most—and structure it with intelligence.
For construction hard money lenders, this is a market shift worth leaning into. If you understand the risks, the upside is undeniable.

Looking to finance a project impacted by tariffs?Our team provides flexible construction hard money loans built for volatile markets.📞 310-619-5557 | 🌐 www.HMLInvestments.com |