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Private Business Loans For Real Estate

Sometimes traditional banks don’t offer the private business loan solutions that you need for your business. In those cases, you need to find private money lenders that are going to help you find the non-bank capital funding or other funding solutions that your business needs. It’s easy to get frustrated when your business needs money, but by finding alternative funding solutions you can get your business the help that it needs to succeed. This article will help you better understand private business loans.

Private Real Estate Loans

One major business where you may need help getting loans is if you are in real estate. Finding hard money lenders can give you an excellent solution when it comes to getting the loans that you need for your real estate business. This section will take a look at the different hard money lending options if you are in the real estate industry.

Commercial Bridge Loans For Real Estate

Commercial bridge loans can be used for different industries, but these are most commonly used for real estate. These loans are a short-term loan that are used by businesses as they look for a long-term lending solution that will work for their business. One of the reasons why this is so popular for real estate is because it allows people to take advantage of great deals on real estate while they wait for additional funding to come in. These loans are also excellent for acquiring a business, paying for renovations, and large purchases that you may need for your business such as equipment.

These are short-term solutions for cash flow problems that you may be dealing with, especially in real estate. You should know that these types of loans do come with a much higher interest rate than other options as a result of them being so short-term.

Fix and Flip Loans

These are other types of short-term loan solutions for real estate investors. This type of loan helps the investors purchase and then improve the property, which allows them to resell it to make a profit. The renovations can be minor improvements around the property or major reconstructions. Fix and flip loans are only able to be used for residential properties. Generally, the real estate investor will use the money to purchase short-sale or foreclosed homes, then use the money to resell the property.

Fix and flip loans can be used for the following:

  • With fix and flip loans, the borrower is able to purchase property so that they can fix it up and resell it for a profit.
  • You can use the money for renovation costs, allowing you to sell the property for a nice profit.
  • You can use the fix and flip loans to do a complete reconstruction for your property.

You can actually get quite a few advantages when you take this approach. First of all, this is a secured loan that uses the property as collateral. This means you may get more favorable terms. These are also short-term loans that don’t usually have repayment penalties.

Residential Rehab Loans

These loans are exactly what they sound like: they are loans to help real estate investors to purchase and improve any residential properties. This is a highly competitive industry, one that you can easily be left behind in if you don’t get the quick and easy funding solutions that you need for your real estate investment. When you get a hard money solution like residential rehab loans, you are able to get your money quickly so that you don’t miss out on an amazing investment opportunity. Traditional loan options don’t work as fast as these hard money lenders do for residential rehab loans.

Cash-Out Refinance

Cash-out refinancing is a type of loan that replaces your existing mortgage with a new loan that will be more than your old mortgage. It offers you the difference in cash, which you can use to spend on improvements. This can be used by homeowners, but it’s also an approach that real estate investors also utilize. There are several advantages to this approach, such as getting lower interest rates than you may have with other options.

The biggest disadvantage with this type of loan is that you are at a risk for foreclosure. You are using your property as collateral, so if you fail to make your payments you will lose the property.

Options for Private Business Loans

For other types of businesses, there are different private lending options that you can consider for your specific needs. Every business is different, which is why you should carefully think about what your needs are. This will allow you to have an easier time when selecting the business lending solution that you really need to succeed. This section will take a look at these other types of lenders so that you can make an informed decision as to which solution is the best one for you.

Private Term Lender

If you go with this option, you are choosing something that is more closely related to a traditional bank. They offer short-term loan solutions, which typically are similar to what you would find with commercial loans. The specific terms of these loans are somewhere between 1 and 5 years, but this can depend on the lender and loan that you are trying to get. But, with this option, you are getting interest rates that are more in line of what you would expect from a traditional lender or bank.

Private Provider for Line of Credit

Another option is a line of credit. Line of credit is great because you only need to pay off the amount that you borrow and because you can continue to borrow any money that is left on your line of credit. Once you pay everything off, you keep this loan until you need it again. This is why this is such an appealing option for many businesses. In many situations, there is collateral required for this type of private business loan. The collateral that is often used here is the accounts receivable for your business.

Private Lending Working Capital

Working capital is another popular solution for businesses. During slow times or a period of struggles, getting working capital to help you overcome these difficult times can make a huge difference in the success of your business. Small businesses can find multiple lenders that can help you get the working capital that you need. It’s important to know that these do often come at a higher expense, so you should make sure that it’s worth it to get a working capital loan.

Cash Advance Consolidation

In periods of cash flow problems, an option like merchant cash advances can be an excellent solution. If you accept credit card payments, this can be a good option to consider when you are really in need of a solution for working capital or to consolidate debt. The merchant will offer you the money that you need for your business but then will take a portion of your credit card sales to pay back the loan. This can be a good option because you don’t have to focus on whether or not you make your payments on time as they are automatically taken from the payments. It will also only take a specific portion of the sales, which allows you to keep the money to pay your bills and earn a profit.

Future Accounts Receivable Financing

This type of funding means that you are selling future business to the private lender so that you can get the cash that you need. This isn’t really a loan. You are selling off future income in order to get cash. Since this isn’t a regulated lending solution, there are a lot of risks to it which means that you will end up paying higher interest rates.

Invoice Factoring

Again, invoice factoring isn’t actually a loan. What you are actually doing is selling your invoices to an invoice factoring company. The factoring company will then take the invoice and collect the debt, in which they will get paid. This is a good option if you have a cash shortfall that you need to resolve right away. For example, say you sell goods to a business and they owe you $20,000. However, due to a shortfall, you need that money sooner than your client can pay you. The amount of money you get when selling the invoice will depend on the factoring fee that is charged by the company.

Equipment Financing

Does your business need new equipment because yours have broken or just don’t meet the needs of your business anymore? This happens regularly in businesses, which is why you need to find the best solutions for financing this equipment especially if you don’t have the money on hand to purchase it now. Equipment financing can be the best solution. You can choose to lease the equipment, which gives you the benefit of upgrading more often but you don’t retain ownership of the equipment. This means that you can’t count it as an asset for your business. However, if you purchase it with this financing, you do own the equipment and it is considered an asset for your business.

Understanding Private Business Lending

Private business lending is a solution that takes over when traditional banks can’t offer the best solutions. Since traditional lenders have to deal with more stringent regulations, they don’t really have a lot of flexibility when it comes to the solutions that they can offer clients. Private lenders have the flexibility to be more creative when it comes to financial solutions for their clients. If you have not found much luck finding funding going the traditional route, you may find that private lenders have the solutions that you are looking for.

There are some benefits and downsides that you need to consider when deciding whether or not private lenders are the best option for your business needs.

Benefits of Private Business Lending

The first thing to take a look at is the benefit of going through a private lender. The biggest benefit is how easily you can access the capital that you need for your business. You get higher approval rates with private lenders, meaning that you are more likely to get the money that you need. It’s also extremely easy. You may not always have to provide several documents for the process, and you get an answer within a few days.

You will also get more flexibility when it comes to how you can use the money that you get. Traditional loans will typically have strict requirements for what you can use the money for. The upside of alternative funding is that they don’t have these strict requirements to contend with, which allows you to get the perfect funding solutions for you.

A final benefit to consider is that with traditional banks, you do need to have excellent credit if you are going to qualify for a loan. Generally, if your credit score is below 680 it can be very hard to get any type of loan for your business with the traditional route. Private lenders have a much lower threshold, often around a 500 credit score.

Downsides of Private Business Lending

The biggest and most important downside to going with private lending is that the funding is more expensive when compared to traditional banks. The funding company focuses on the risk of giving you the money, often giving money to the riskier clients. That’s why they have high-interest rates on their loans. Banks are able to offer lower interest rates because their lending is less risky to them.

Private Money Lenders vs. Traditional Banks

When it comes to borrowing money, your options are to go with a traditional bank lender or work with private money lenders. Some people prefer the more agreeable terms of the bank, but the problem with traditional banks is that it can be a very complicated process to go through for your loans. They are more regulated by state and federal governments, which does give you peace of mind that you are protected when getting your loans.

Private lenders are still regulated, but they have less strict standards that are required of them than traditional banks have to manage. Because of these less strict standards, private lenders are able to be more flexible in the loans that they offer and who they offer these loans to. This makes it easier for you to get loans from private lenders than traditional banks.

Here is a breakdown of the significant differences between private lenders and traditional banks.

Private Lenders

  • More expensive as a result to the higher interest rates.
  • Faster process of applying and getting your money.
  • Approval process is easier.
  • More flexibility because of less regulation
  • Loan options are more customizable.

Traditional Banks

  • Less expensive because of lower interest rates.
  • Slower to move through the process.
  • Approval process is more scrutinized, including details like a credit audit and financial history.
  • Has more government regulations, meaning that they offer less flexibility.
  • Strict regulations reduce the loan options.


Need help selecting the Best Hard Money Lender?

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Selecting the Best Hard Money Lenders

After you understand your options for alternative funding, knowing where to get your hard money loans is beneficial to you. This section will take a look at tips so that you know that you are trusting the right lender for your needs.

Do Your Research

One of the best things that you can do for yourself when finding a hard money lender is to do your research. This approach to funding can be quite different from traditional lending solutions, so it’s a good idea to know what to expect if you’ve never worked with a hard money lender before. These can often be significant differences, so you should be sure that you are completely comfortable with them.

Look at Reviews

It’s very important that you find a lender that has a solid reputation in the industry. There are many scam companies within this industry, so you should do your research to see how positively the lender is reviewed before making them an option for your business. It’s also a good idea to ask for referrals, since talking to someone who worked with the lender before.

The Best Value

You shouldn’t go with a lender just because they have the lowest rates. You want to be sure that you select someone with value. You should be looking for things like a reputable company that offers transparency and professional guidance as well.

Trust Your Instincts

Your gut can be an exceptional guide whenever you make any decisions for your business. Trust your gut and you may find the best approach to funding when you do so.


Finding funding for your business can be difficult, especially in the real estate world. There is so much competition in this industry, it can be a long and complicated process that doesn’t even guarantee that you will get the funding that you are looking for. Through alternative funding options like hard money lenders, you are more likely to find a funding solution that will work for your specific needs.


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Weston FL 33327




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