What to look for in a Private Lender
There is no doubt that we all need alternative finance and lending at some point, hence the proliferation of online sources of financing and the variety of such finance. Be it for remodeling your entire home or starting to invest in the unknown yet booming North Carolina real estate market in cities such as Durham, Raleigh, or Charlotte, to name a few. Regardless of what you need, the finance for it is out there.
The one aspect of the sector that is quite interesting is that there are very few guidelines or ‘how-to’ advisory articles as to how to choose private lenders. This article aims to do just that. To provide some clear guidelines for choosing a private lender or financier. Whether it is for investment in your new business, buying real estate as a business option to fix and flip, or for commercial rental, whatever the money is needed for, as long as you have a solid plan, then you need to know what to look for in a private finance solution.
Reputation is key
The best advice as to private money lending that anyone can provide you with is a genuine understanding of the lender, bank, or company providing the funding. You need to know who they are and understand their pedigree and reputation. It’s simply an ethical requirement to have some ideas about where the money comes from, which you will use for your business expansion. Also, ensure that you have done your research to establish authenticity, certification to loan, and the related aspects of the business reputation and its risks. If there is a hint of impropriety, then simply look elsewhere for your finance. Do a whole of the market comparison and check with previous customers as well as the competition as to what they think and how the business works.
Knowing what the rates are
You won’t be able to choose between lenders unless you know the current and accepted interest rates. If it’s an industry-specific loan, you will need to understand how it works and inquire from others who have accessed the finance as to repayment rates and periods. Remember, any money borrowed must be repaid in a specific time frame and with specific agreed-upon interest rates. A great example is Sachem lending, who are clear about their rates compared to other traditional lenders and explain why this is the case. The rates must be in bold print and not hidden away in the fine print.
Knowing what you need
A clear and proven understanding of the business’s needs is the only premise for finance. Unless you know exactly what you need and why there will be no way to assess the related risks for not meeting the financial obligations versus taking out the private finance. When bidding on commercial or residential property, for example, it is important to keep within the limits of prearranged finance as going above this may then affect the ability to make any profit and affordability and repayments.
Finding the right finance can be one of the hardest things to do; knowing what to look for in an alternative or private source of funding or finance is critical in this day and age, and this article has been able to provide a start in this regard.