Non-traditional lenders are often the solution of the problems of real estate investors and business owners when it comes to their finances for operating expenses as well as property purchases. Non-traditional lenders, also called alternative lenders are excellent loan providers since they are often not heavily regulated by agencies and can lend small amounts quickly with lower interest rates. Be that as it may, business owners are still unable to see the distinction between these private money lenders and hard money lenders.
What Characteristics do Private Money have that Hard Money do not have?
Although both of these loans are able to aid in financing the business proprietors with their financial needs, they also have to set a time for their method of payment. Even if that is the case, there are still important factors that will be able to determine the difference of these two loans. The financial product that will be of utmost help to you can only be selected if you will be able to distinguish the difference between these two loans.
All about Hard Money Lenders
Businesses who concentrate on alternative lending are offering hard money loans. Hard money loans are financed by private sources but the lenders are still managed and their area of expertise revolve around real estate investors, business owners and private borrowers. Private money lenders are similar with hard money lenders in terms of lending decisions since they do not base their decision on the credit scores of the borrower but on the deposit that the borrower is able to make.
Aside from that, loan terms and a set of approval criteria is still available for these hard money lenders to follow. Even if they work with borrowers who are not able to finance themselves, they are still not into extensive negotiation regarding the method of payment. On behalf of their private sources, the lenders follow the standard formulas of the industry in the making of repayment plans and interest rates so that they can provide fair terms to their clients while still being able to gain a lot of profit.
What is private Money Lending?
As the name implicates, private money loans are loans that are being offered only by private lenders. Private money loans are considered as secret loans since other people do not have to know about the loan and the lender does not have to advertise that he or she is lending some money. These private money lenders have the freedom to choose their borrowers and the method of payment since they can lend money in private that is why there is no need for them to follow the rules and regulations provided by the lending industry.
These private money lenders can also have a different set of approval criteria. There is also a limitation for borrowers with regard to these private money lenders since they are not obliged to follow the set of criteria in the lending industry.