What are private lenders? Before we get into what private money lenders are, let us discuss what they are not. As private investors we are not in the job of connecting businesses with available third party funding; we are not brokers that arrange financial partnerships for a fee. Rather, the funding that private lenders provide is directly from their own resources. This is otherwise known as angel investing and this is what I offer.
There are a variety of benefits to seeking small business funding through private lenders, such as:
Qualifying Factors – Current market restrictions have put a stranglehold on lending guidelines. Traditional lenders are held to stringent standards which means that credit score is the King of criteria. As private money lenders, we are able to be much more flexible when it comes to our qualification process. It is not as if credit score or financial history does not matter; however it’s much more of bigger picture than a number on a page; we are able to examine potential business partnerships on a case-by-case basis and offering funds for small business start-up loans is completely at our discretion – and ours alone.
Limit of Loans – Again, because the money that private lenders supply is their own, they are to solely determine the amount they are willing to extend. Because we work with different terms – such as offering funding in exchange for equity, partial equity, or convertible debt – we are just as committed to seeing the business succeed. As a result, private lenders will extend the funds needed to get a business up and running completely and successfully and that number is determined on a case-by-case basis.
Loan Details – With traditional start-up business loans, you are essentially dealing with principal and interest. And, depending on the market at hand, interest rates can cost borrowers a considerable amount of money. With angel investment, the terms of the loan are different. Typically, business funding is provided in exchange for equity in the business.
Ultimately, it is important to remember that there are other options to consider when it comes to small business funding; private lenders offer an alternative road to getting a business off the ground and running successfully.