Pre-closing earnest money and deposit financing for commercial real estate sponsors. H Equities provides soft deposit financing from $500K to $5MM, allowing sponsors to control contracts and complete due diligence without tying up their own capital before hard deposit deadlines.
Overview
Soft deposit financing covers a sponsor's earnest money deposit on a commercial real estate purchase contract during the period before a hard deposit is required. When a sponsor enters into a purchase and sale agreement, the seller typically requires an earnest money deposit that starts as refundable (soft) and becomes non-refundable (hard) after a due diligence period. Soft deposit financing provides the capital for this deposit, allowing the sponsor to control the contract without deploying their own funds during the refundable period.
This type of financing is particularly valuable for sponsors who are actively pursuing multiple deals simultaneously, operating in competitive markets where controlling a contract quickly is essential, or completing complex due diligence that requires time before they are ready to commit their own capital. Because the deposit is refundable during the soft period, the risk profile is different from other forms of real estate debt, and the financing is structured accordingly with short durations and fast execution.
H Equities provides soft deposit financing from $500K to $5MM with rapid execution designed to match the pace of competitive deal timelines. We understand that deposit deadlines are hard deadlines, and we structure our process to meet them.
Key Parameters
Use Cases
Control a property by posting a deposit immediately while arranging the full capital stack. Move faster than competitors without deploying your own capital upfront.
Sponsors pursuing several acquisitions simultaneously who cannot tie up capital in deposits across multiple contracts. Soft deposit financing preserves liquidity for GP equity contributions and operations.
Properties requiring extended due diligence, entitlement work, or zoning analysis before the sponsor is ready to commit. Soft deposit financing buys time to complete the work before going hard.
Control development sites with earnest money while completing feasibility studies, entitlement processes, or construction loan arrangements. Particularly common in land and condo development acquisitions.
Process
Send us the purchase and sale agreement, the deposit schedule, and the timeline. We evaluate the transaction and the sponsor quickly.
We approve the soft deposit financing and execute a simple agreement. Documentation is streamlined for speed given the short-duration nature of the financing.
We fund the earnest money deposit directly or through the sponsor to the escrow agent, meeting the contract deadline.
The financing resolves when the sponsor either goes hard on the deposit (and our financing is repaid from acquisition proceeds or replaced with deal-level capital) or the contract is terminated and the refundable deposit is returned.
FAQ
A soft deposit is refundable to the buyer during the due diligence period — if the buyer terminates the contract within the agreed timeframe, the deposit is returned. A hard deposit is non-refundable, meaning the buyer loses the deposit if they do not close. Soft deposit financing covers the refundable period, which carries lower risk because the deposit can be recovered if the deal does not proceed.
Soft deposit financing can typically be arranged in a matter of days. Because deposit deadlines are fixed by the purchase contract, we have streamlined our process to move at the speed the deal requires. Speed of execution is the primary value proposition.
If you terminate the contract during the soft deposit period, the earnest money is refunded by the escrow agent, and the soft deposit financing is repaid from those returned funds. You are not at risk of losing the deposit during the refundable period, which is the foundation of this financing structure.
Yes. Soft deposit financing is available for all commercial real estate property types including land, condo development, multifamily, office, retail, industrial, and other CRE asset classes. It is particularly common in land and development site acquisitions where due diligence periods tend to be longer.
Soft deposit financing is structured as a short-duration facility with pricing that reflects the brief holding period and the refundable nature of the deposit. Pricing varies based on deal size, duration, and sponsor profile. Contact us for specific terms on your transaction.
Soft deposit financing is a standalone product designed for the pre-closing deposit period. However, H Equities offers a full range of debt and equity products, and we can discuss transitioning to bridge financing, mezzanine debt, or other capital solutions for the acquisition itself.
If the seller requires the deposit to go hard before you have completed due diligence, that changes the risk profile of the deposit and the financing. We can discuss alternative structures, but soft deposit financing is specifically designed for the refundable period. Hard deposit situations may require a different capital solution.
Learn More
Send us the contract and the timeline. We fund deposits at the speed your deal requires.