What Is The Difference Between Hard Money And Soft Money

Soft money is money donated to political parties in a way that leaves the contribution unregulated.

Soft money is a monetary loan that s not intended for a specific use. These terms are used to refer to money loaned and the purpose behind these loans. Hard money vs soft money. In the simplest terms hard money is from political donations that are regulated by law through the federal election commission.

Hard money and soft money are simply assumed that hard money is liquid cash or cash on hand while soft money is the money on paper. The difference boils down to a few crucial words and one administrative ruling. Hard money is a monetary loan used for a specific purpose and with specific criteria for paying it back. Hard money comes from monetary donations in support of a political candidate.

Hard and soft money can also refer to how clients pay their brokers or financial services providers. Hard money loans can close faster than soft money loans. 3 5 days vs 10 14 days. This is a loan whose period is long and that involves small interest rates and whose duration can be as long as 3 5 years.

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In this case hard money refers to direct payments for services rendered brokerage. Here money is printed without keeping adequate reserves like gold in proportion to the newly issued money. Hard money is given directly to political campaigns while soft money is given to political parties for voter education. Since the loans are short term the interest rates are higher than a soft money loan.

Perhaps the best example of a soft money loan is a car loan. Soft money on the other hand is donated to political parties for purposes not intended for the support of political candidates running for federal office. This makes hard money lenders an excellent source of capital for business owners and entrepreneurs. These definitions are not true.

These donations are heavily regulated and monitored by the federal election commission. Repayment interest rates are actually lower than the ordinary market rates. While hard money is the funds directly donated to a political candidate soft money refers to funds donated to a party for party building and promotion. Soft money is just paper currency backed by government bonds.