Do You Know Any Private Money Lenders? 5 Reasons You Should
Both real estate investors and small business owners are two groups that commonly utilize private money lenders. A private money loan is any loan from a non-bank source of financing. Most auto financing falls under the category of private money loans, just like hard money loans used in real estate investing. Because these loans can fund much faster than traditional financing, they allow individuals to capitalize on opportunities or to solve problems. But why should you know a few private money lenders? Below are just a handful of the reasons why you should have a few private money lenders in your digital rolodex:
1. Bad Credit Nightmares: a foreclosure, bankruptcy, or other credit issue can really limit an individual’s ability to borrow money. Most private money lenders don’t care about credit, and will lend to you anyway. If you have bad credit, knowing a few private money lenders is a must. You never know what opportunity could come along for which you’ll need financing.
2. Fast Real Estate Acquisitions: Good real estate deals are typically done very quickly, with all cash, and don’t wait for bank financing. But because private money lenders can make quick lending decisions, hard money loans can work like ‘all cash,’ because of their rapidity of funding.
3. Inventory or equipment purchases for business: Small business owners are often unable to obtain credit lines. Private money lenders will step up to provide credit to small business owners when banks will not. The availability of this type of credit can be life or death to a small business.
4. Buy Outs: Whether it’s a partner, family member, or business entity you are looking to buy out of an investment, a private money loan is a great alternative to complete a buy-out. Often it is cheaper to pay interest on a loan, rather than keep a bad partner in an investment. Private money loans are commonly used for this purpose.
5. Repairs to real estate owned: Many banks won’t lend money for repairs, improvements, or for additions to real property. Private money lenders, on the other hand, will make loans for repairs, improvements, and will also lend on vacant, distressed properties.
These are just a few of the reasons you could find yourself needing a private money lender sometime in the near future. By making relationships with non-bank lenders, you can create opportunities for yourself or provide solutions to problems. For more information on our private money loans, take a look at our loan program page and keep our contact information in your rolodex!