Sometimes you need to borrow money. It is a part of life that can feel daunting. Major credit lenders have massive amounts of red tape. They will check your credit score, employment, tax debt, and other shortcomings before informing you that you have not been approved.
Did you know that hard inquiries on your credit report can actually lower your score? Private lenders provide the opportunity to borrow money without the hassle.
What Are Private Lenders?
The most popular private lenders include hedge funds, venture capitalists, private equity investment firms, and wealthy individual lenders. Within these categories, lenders are broken off into subsets. Some private lenders look to lend riskier loans, as they can charge a high interest rate.
Other private lenders look for less risky loans with moderate rates and the conservative private lenders look for low-risk situations where a low interest rate is applicable.
What Kinds of Private Lenders Are There?
Private lenders’ focus varies depending on their sector of private finance. For example, some private commercial real estate lenders may focus on income-producing property. Income-producing property is real estate that you invest in to make money, such as renting to a tenant. Other private lenders may focus on distressed properties, construction loans, or all of the above.
Types of Loans
Private lenders may focus on short-term loans while other lenders focus on lengthy operationally motivated loans. Private lenders are viewed as discretionary lenders. This means that they do not have to get approval from a bank committee or creditor to approve your loan.
A Private Loan Puts You in the Driver’s Seat
When you work with a private lender, you are in control. What are your terms? You and the lender determine the details of the contract together without outside influence. Company policies of big banks will prevent you from getting a loan if you do not meet their criteria in full. Private lenders can overlook things such as credit score, and work with what payment plans work best for you.
A Huge Benefit: Fast Money
Applying and being approved for a loan is a lengthy process. With a private lender, the speed at which you are approved and the money is in your bank account is fast. Sometimes it takes as little as three hours for your money to appear in your account once you have been approved. The sooner you get your loan, the faster you can get started expanding your business.