Private lenders of all sizes are the de facto gatekeepers to investment opportunities and carving out a new path in this market in an attempt to fill the void left by the absence from traditional bank lending. These “amateur” lenders can demand a higher cost for their funds, as well as insisting on tighter financial covenants and controls than were typically seen in the boom years. Borrowers seeking private loans generally expect to pay higher interests rates, with shorter terms in exchange for a quicker avenue to the needed funds, less rigid qualification requirements, more creative structuring options and often times the absence of traditional loan fees.
There are risks associated with private money lending and those assuming the role of a private lender need to understand how to best structure their financing arrangements to protect and secure their loan. In addition to the default risk, lenders need to understand the interest amounts and fees that can be legally charged, regulatory hurdles and how to take steps to avoid pitfalls that could put their loan and the underlying security at risk.
We help private money lenders and investors take advantage of the opportunities in today’s market.