New Trends in Private Money Loans
Private money loans, or non bank loans, are in high demand in our tightly wrapped credit market. In the private money lending space, there are new technology driven trends that are being tried, tested, and of course, copied by others at break neck speed. In fact, the financial technology sector has grown in leaps and bounds in recent years, churning out startups such as Square, the money transfer startup ‘TransferWise,’ and so many others. Specifically in the area of private money loans, a couple of the most notable trends include:
1. Crowdfunding: This is a new trend whereby money is raised from a large number of individuals via the internet to invest in projects, businesses, or other ventures. Most commonly associated with sites such as Indiegogo and Kickstarter, the crowdfunding concept has gained huge steam and many copycats have followed suit. This concept has inevitably leaked into residential and commercial lending. However, the legality of crowdfunding on residential real estate is questionable given the new legislation under Dodd Frank and the Safe Act. Will these crowdfunding sites that lend on residential real estate be shut down due to non-compliance, or will they just operate under the radar? Either way, crowdfunding in real estate is a new trend that is yet to be fully tried and tested. Many companies posture as if they are doing it well and making money at it, but no one has yet seen the numbers, so only time will show if crowd funding works in real estate or not.
2. Microlending: A concept that’s been around for awhile but is gaining steam as a new trend in lending is microlending. This is the giving of small loans from an individual or group to an impoverished person or business. Most commonly associated with the website ‘Kiva,’ microlending allows individuals and businesses to obtain credit in a geographic area where credit may not be readily available such as in Africa, South America, or in Asia.
As technology continues to advance in the area of private money loans, more trends like these will grow and thrive to fill the demand for credit. For those who have trouble obtaining loans, concepts like these will be welcomed with open arms. If you are seeking a real estate loan, this is our particular speciality in the area of private money lending. For more information on our real estate loans, please check out our loan programs page or submit a loan request to us today by clicking here.
Posted by Corey Curwick Dutton
4 thoughts on “New Trends in Private Money Loans”
Let me ask you, why are “hard money” loans called such? Isn’t the quality of the money the same if you get it from a bank or not? Is the private money loan you refer to the same as a “hard money” loan? Thank you in advance for defining these terms further.
Hard money loans are called this because they are loans against “hard” assets. Bank loans are more based on credit, income, and ability to repay versus a hard money loan that is just based on a “hard” asset. Hope that helps!
Regarding Hard Money or Private Money Loans. Ever since the HOEPA ACT aka section 32 and now DODD FRANK regulations lending to owner occupied SFR one to four units has become a thing of the past and DODD FRANK starting January 2014 has taken the Purchase Money loan out of the picture. Way to many regulations. HOEPA and DODD FRANK should both be repealed.
Corey, I have a personal question pertaining to a private loan. If yiubwoukd be so kind as to email me back I will provide you with my phone number. Thank you and have a Wonderful day and week ahead.