In the world of real estate, private money lending is something that any business may want to consider. There are many advantages to taking out one of these loans. Below, we will walk you through what a private money lender is, what the loan covers, what you can use it for and how it may benefit you.
A private money lender is a non-institutional person or company that loans money, generally secured by a note and deed of trust, to fund a real estate transaction. Private money lenders are considered more relationship-based than hard money lenders.
If you are doing a rehab flip, buying a property, renovating and repairing, and selling to another investor, hard money lenders are sometimes best. These loans are convenient if you need extra money to purchase and do rehab work for a short period, perhaps only a few weeks to a month or so. At the closing, if or when you sell the property, you would then pay off the loan and keep the remainder of the proceeds as your profit.
The application process is also much quicker with private lenders. You can be approved and receive the funds for a private loan in days rather than weeks or months as with a bank loan.
Private lenders also offer term loans to established businesses that can demonstrate the ability to make payments from their revenue. These rates and fees are often higher than loans from banks.
Where to Find Private Lenders
There are many private business lending companies online to choose from within the business loan marketplace. You can find dozens of lending firms to choose from, depending on your requirements. For example, some specialize in short-term loans, others in niche markets such as franchises, etc.
Company Name: Lending Universe