ALL TOO OFTEN EMERGING ENTREPRENEURS go into banks for loans and come out empty-handed and discouraged. These entrepreneurs may have great business ideas and good plans, but somehow the banks aren't interested. When the same individuals go to private lenders, however, they often have better luck at getting the money they need.
PRIVATE MONEY refers to money that is loaned to a company or individual by a private individual or organization. Private money lenders often have non-traditional lending guidelines, which can work to the advantage of the borrower. For instance, private lenders are often:
More flexible than banks, mortgage companies, and other institutions in determining which borrowers meet their eligibility criteria to receive a loan Less demanding than other lenders in examining the borrower's background and position Faster in making lending decisions because they don't have a large credit committee or board that must review a loan application at great length before they approve a loan AN INDUSTRIOUS LOAN SEEKER might set out to identify loads of private money lenders in different parts of the country. This is an admirable goal, but it's not always realistic. The trouble is that:
Private lenders may seem few and far between because they are typically individuals who seek to invest excess money in high-profit ventures. (By the way, it's worth noting here that anyone can lend his or her money privately and legally without being licensed as a loan company or bank.)
Private lenders usually make one loan and then sit back for a few months or more to watch the progress their investment is making in the business.
Private lenders seem to come and go. They're in the market to make a loan. But once they make the loan they may take themselves out of the market for awhile, until they're ready to make another investment.
BY KNOWING THESE TRAITS OF PRIVATE LENDERS, you can improve your chances of getting some of the multi-millions of private money that's out there. Try taking the following steps:
1.Identify private money lenders that have a history of making loans nationally or focus your search on ones located in your geographic region 2.Prepare a printed business proposal and loan request
3.The request should state exactly how much money you need, rounded off to the nearest thousand dollars.
4.Never pay front money or offer to pay advance fees of any kind. An honest lender will not ask you to pay fees up front 5.Give your private lender time to study your business proposal. A week is usually good before you call the lender's office for an update.
To learn more about this author, visit Tyler Hicks's Website.
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