Private money lending is basically when an individual, partnership, or company loans an investor or financial institution their personal capital to utilize for commercial investment purposes. In the real estate market, it is an appealing alternative option compared to a conventional bank loan or private lending in general. For investors or lenders who are looking to lend money to businesses or individuals, the concept is really quite simple. You take out a loan with a private lender and use that money to make an equity injection into the business or into your personal portfolio. This means that instead of making monthly payments on a loan or dealing with interest rates that are generally much higher than what you would experience through a bank loan or private lender, you can often get better terms and conditions in the money lending market.
As hard money lending has become more popular and more lenders have popped up across the country, the rules that govern these programs have also changed dramatically. Prior to deregulation in the financial industry in 1997, the federal government limited the qualifications for these programs so that only the safest and most reliable financial institutions were able to participate. Regulations also required that the lender provide a full disclosure of all fees associated with the loan as well as the risks inherent in those fees. However, after the passage of the securities lending act, it has become much easier to obtain an investor loan and many lenders have taken advantage of this lax regulatory environment to provide poor credit borrowers with a chance to improve their credit rating by securing financing from reputable money lenders. As such, today you can find a number of hard money lenders that specialize in Secured Business Financing as well as many other types of private funding sources.
Private lender sources also offer a number of options for hard money lending. These options can include loans against any number of assets that an investor may own such as commercial real estate, cars, boats, planes, furniture, and even businesses such as franchises. As you can see, the possibilities are endless when it comes to securing loans against any type of property. With the current economic environment causing many people to suffer from hard money lenders are finding it quite convenient and easy to obtain loans for investors. They are also finding that these lenders are willing to provide loans at very competitive rates with heavy down payments and other reasonable requirements.