Comparing Banks to Private Equity Lenders
About Private Money Loans
It can be difficult to get financing for a large sum of money. Most banks have a protocol in which they follow, which may leave the borrower leaving empty-handed. They have to go through credit checks and the history of the applicant’s status which may not measure up to the bank’s standards. This is where the option for private equity lenders comes into perspective. If the borrower has a low credit score, then it does not mean all is lost. They are not based on income, assets, or credit. They approve the loans based on the borrower’s equity. If the customer has the equity, then the private equity lenders will use it for collateral. Properties from $50,000 to $2 million are the target range for private money loans. These apply for both business loans and personal loans.
Business Needs for Private Money Loans
People in need of private money loans are usually investors, business owners, developers, and home flippers. Business minded people can invest the money and pay back the investment in a very short amount of time. This is usually the next step for the borrower after the bank declines their application for a loan. The bank may approve but may not give the entire amount. The borrower will have to show the bank they are serious about the business transaction, and they will have to come up with a percentage of the loan requested. There is a lot of red flags to go through with banks, and this process can take time. This is something the borrower does not want to waste. Private money loans can give the approval the same day, and only has a seven to ten day waiting period for the funds to be deposited and cleared into the business owner’s account. The business owner must heed the warning that a business loan is only to be used for their business.
Personal Needs for Private Money Loans
People who also may be rejected by banks seek private money loans for financing their homes. There is a huge difference with private equity lenders versus banks which can make the home owner’s life so much easier. The same rules apply for personal and business loans. If the loan is for personal use, then it must only be used for personal issues. All personal loans can also be approved the same day and funding within seven to ten days. There can be multiple reasons in which a personal loan is needed. Many will use the loans as a first time home buyer, refinancing mortgages, or consolidating debt. Whether personal or business, one will find better benefits with private money loans than banks.