Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. Many of these professionals are ultimately able to obtain financing from private lender For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.
On the whole private lenders are looking for the same information and will conduct a similar due diligence as the banks to make a positive funding decision. They are looking for great business ideas, at the right time, with an airtight business plan, that includes contingency scenarios and realistic forecasts, backed by experienced and professional people with some financial stake in the business. However, most private lenders are “specialists” who engage in higher risk ventures because they clearly understand both the opportunity and risk associated with selected business types or market segments. Private lenders will not only fund project the banks rejects, they will creatively structuring loan repayment and sometimes be a helpful resource.