Pros of Private Money Loans
Private money loans are the oldest form of financing we have. The very first time one person asked to borrow a coin from another was technically the first private money loan. Still, there are many pros of private money loans these days as well.
First off, what are private money loans? While borrowing money from your friend technically meets the requirements, we are really talking about a commercial finance transaction. In this context, we have a business or person borrowing money from a private money source that is not interacting with the public in a retail fashion such as is found with Bank of America, Wells Fargo or whatever banks happen to still be standing at this point in time.
When it comes to private money loans, there are definite pros and cons that you must take into consideration. A long as you know the parameters, you can make an informed decision on how to proceed. So, let’s take a look at the pros of these loans.
The first positive aspect of private money is the availability of it. The current economic crisis has resulted in a giant mess. One of many aspects of this mess is the credit crunch. Simply put, banks are being very stingy with their money. The fact the federal government intends to pump more money into these institutions will not change this fact. Private money, however, is readily available. It is usually one or more wealthy individuals making loans, which means you are not tied up by banking issues.
The second positive aspect of private loans has to do with creativity. If you’ve ever applied for a loan from a traditional lender, the red tape and paperwork need is enough to make you scream for mercy. Private loans are much more direct. An application is needed and some minor documentation. Once that information is in, you will get an answer fairly quickly. There is not a lot of back and forth going on.
The third positive aspect of private loans is flexibility. Banks do not loan money on deals they are not familiar or comfortable with. Private money does. If you have a unique situation, the private money lender will take the time to investigate it and make a decision. When every other lender has said no, private money lenders often say yes.
Finally, a huge positive with private money loans has to do with speed. It can take 30 to 60 days to get financing through traditional lenders. This is not the case with private money. Turn around times are measured in days, not months. When you need financing fast, private money lenders are a great resource.
There are many pros of private money loans and, admittedly, some downsides. The key is to know what you are getting into and what is involved. At that point, you can make a decision regarding whether private money loans are the answer to your financing problem.