The world of lending took a major turn for the worse for many businesses in the wake of the 2008 financial disaster. As new laws and lending requirements were crafted in response to that crisis, businesses suddenly found themselves having trouble obtaining the cash they needed due to more severe loan guidelines. Sadly, many could not even qualify for the smaller loans that used to be easy to obtain. As a result, many in Seattle, WA have turned to the private money lenders Seattle has in abundance.
This is especially true for real estate purchases designed for resale. Many of these brokers struggle to obtain the financing they need when they need it. Often times, they can be forced to watch as properties are sold to others while the bank goes through its lengthy approval process. Banks, required as they are to comport with federal regulations, simply are not equipped to make the type of rapid loans these real estate brokers need to ensure that they have the capital on hand to make deals quickly.
That’s where private loans come into play. Because this type of lending is done outside of the typical bank structure, it is not subject to the same stringent loan requirements borrowers usually confront. The capital for the venture comes from individual investors or companies that have much more freedom to move money around at a pace that actually meets their clients’ needs.
There are, of course, licensing standards that must be met, and these lending sources are not free from all laws related to loans. Where they benefit is in the reduced amount of regulation they endure when compared to banks. This lower regulatory burden makes underwriting far easier for these investors than it is for most loan officers in the banking world.
This loan source can help real estate brokers to bid on homes secure in the knowledge that the funding they need can be obtained when they need it. That easy availability of credit can dramatically increase their ability to close deals, and allow them to enjoy the discounts that some sellers offer when properties move quickly.
Perhaps even more important is the fact that the investors do not check the borrower’s credit history. That’s a great benefit for new business owners who lack a history of solid credit, and can even help those whose credit scores are less than acceptable for most banking institutions.
Given the nature of this type of loan, it should come as no surprise that investors tend to charge a higher rate of interest than the typical bank. Still, that added cost is negligible when compared to the greater number of quality deals and discounts that become available to brokers using this funding source.
The bottom line for real estate brokers is clear: this type of private sourcing for finance needs can be an indispensable asset for anyone in the industry. With a vast array of benefits available, and very few drawbacks, the average brokerage business can dramatically increase its success by relying on this funding mechanism for its transactions.