Private Money Lending 101: How Private Money Loans Work

Private money lenders are not only a popular way to borrow money for businesses, but also for individuals who want to borrow money. Unlike banks, they do not have to follow strict guidelines for credit checks or any other form of due diligence when approving business borrowers. Because private money lenders are not governed by federal regulations, they are in the best position to charge exorbitant interest rates. Because private money lending is based upon trust rather than collateral, borrowers must be able to convince private money lenders that their businesses are sound and will succeed. It is important to use a trusted private money lender with a good track record of lending money to help finance your business ventures.

A hard money loan, also known as a hard credit loan, is a special type of unsecured loan funding through which a private investor or company gives a business owner money secured by property. Hard money lending is often issued by private individuals or institutions. The most effective method for private hard money lending is hard money borrowing from friends or acquaintances. If you are interested in applying for hard money lending, there are many different sources to choose from including local banks and credit unions, online lenders, brokerages, and other private money lenders. However, the Internet has proven to be the most popular and easiest way to find private money lenders. In addition, a quick search of the Internet will reveal a plethora of information and opportunities to obtain private financing for your business.

Private money lenders offer a number of unique advantages over conventional financing options. With private funding, you can get financing quickly and easily for your growing business venture without having to go through the costly process of refinancing. Because private lenders are able to review your business plan with great care and make appropriate financing decisions, they are an excellent alternative for small business owners who are either trying to get into a positive cash flow cycle or are looking for ways to grow their real estate investment portfolio.