If you’re a new business owner -and you are finding that it is more difficult than you originally anticipated to open and run a new business endeavor – then using private money lenders might be the way to go. Avoid closing your business within the first year of opening by using a reputable money lender who can provide you with the capital needed to increase your business standing, boost your business visibility, and use new marketing tactics and advertising methods to reach your target market. But if you are a new business owner, you might have some serious questions considering the process of money lending, how to use private money lenders, and how hard money lenders differ from other lending options. Let’s check out all of the details here!
Are you curious about using private money lenders as a small business owner? You might have one of the most common questions!
What is private money lending?
One of the most obvious questions entrepreneurs and small business owners might have about using private money lenders from Asset Based Lending to fund their business endeavor is – what is private money lending? Simply put, private money lending is simply taking money and borrowing funds from an individual person, not a bank, financial institution, or corporation. Since you are putting your trust in an individual, you will have to ensure that you bet the person before borrowing their money and follow the correct legal steps.
What is the difference between using a private money lender and a hard money loan?
Private money lenders typically are singular people that simply let you borrow money to invest in your new business or entrepreneurial investment opportunity. A private money lender could be someone like a friend, family member, or an investor who is interested in your personal project. Hard money lenders are typically somewhere between a personal connection (i.e. family member or friend ) and a bank – they do not have a long set of vetting necessary for you to borrow money, but they typically have their own rules that you must follow.
Are there any advantages to using private money lenders?
If you are a new business owner, you might wonder why you should use private money lenders over other financing options. In short, private money loans are the best option for those who need to do a lot of fixes in their business or might need to repair their property without spending a fortune. Furthermore, business owners that use a private money lender will typically have to show fewer requirements and background information than using a bank or other financial institution.
Are there any downsides to using private money lenders?
Now that you know the positives of using private money lenders, you might be wondering about the downsides. The disadvantages of using private money lenders vs. bank loans or other options are that you might have a higher interest rate, you might have high fees if you have poor credit, you can’t pay off the loan within one month, and you will have to use collateral.
Answering these four questions can give you better peace of mind as a new business owner who is considering using a private money lender to help finance your new business venture!