Whether you are reading magazines or watching the television, all financing discussions center on the banking industry. Taking it in, one would imagine your only option is to work banks for loans
This generalized notion of finance has been cracked this year. As banks start to fall apart, many are shocked to see the paper thin nature of the finance market. If you think this is bad, 2009 is shaping up to be much worse.
Lending institutions do something very interesting when they start feeling financial pain. They stop lending money. While they are happy to take in deposits, the hold on to it in an effort to balance out their books.
Many individuals and businesses wonder if there are alternatives to the banking industry when it comes to financing. After all, you have to look around if the banks are not going to give out money. Fortunately, private money lenders are available.
Private money is pretty much what it sounds like. It usually consists of a collection of wealthy individuals pooling their money in anticipation of loaning it to companies for profitable purposes.
Banks are highly regulated despite what we are currently seeing. As such, they tend to only loan money on deals that fit their comfort level. If a transaction does not, the banks simply walk away. Private money does not.
Private money lenders are very receptive to creative financing situations. This makes them the primary lending source for such situations. While they exist in the personal finance arena, they typically are more common in business finance.
Just what kind of individuals make up a private lender? You typically find doctors, property investors and individuals with serious money. A person is then designated to receive and filter lending requests.
So, how expensive is a private money loan. The cost can be the same as a traditional loan or it can be higher. The answer is entirely dependent on the type of deal you are trying to put together and the risk associated with it.
If you are trying to get financing and feeling the effects of the current credit crunch, you should consider the possibility of a private money loan. Unlike banks, private money lenders are still lending money.
About the Author:
Dan Gibson is with CommercialLoanstop.com - your resource for San Diego hard money loans.
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