In recent years, private lending has emerged as a popular alternative to traditional banking options for borrowers in Australia.
From bridging finance and cashing out equity to distressed construction loans and development finance, private lending in Australia offers a range of loan options such as a secured business loan for individuals and businesses who need access to quick and flexible financing.
In this article, we will examine the benefits and risks of private lending in Australia, and explore why it has become an increasingly popular choice for those in need of finance.
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What is Private Lending?
Private lending is a type of lending that takes place without the involvement of banks or financial institutions.
This type of lending is often considered a more flexible and personalised alternative to traditional banking options, as private lenders are often more willing to consider loan applications from borrowers who do not meet the strict eligibility criteria of traditional banks.
As distinct to Unsecured Loans, Private Loans are a secured business loan, usually by property and sometimes with vehicles, equipment and machinery.
See more: Secured & Unsecured Business Loans.
Why do People Use Private Lenders?
There are several reasons why people choose private loans over traditional banking options.
One of the biggest reasons is the difficulty in accessing finance through traditional banks, which often have strict eligibility criteria and long loan application processes. Private lending can offer more flexible solution to these problems with quick loan approval, with some lenders able to provide loans in as little as 24 hours.
Another reason why people use private lenders is because of the limited loan options and strict repayment terms offered by traditional banks. Private lending is a flexible loan option with more open eligibility criteria.
Private lending offers increased flexibility in loan terms and repayment options – including the ability to capitalise interest and other costs into the loan which allows borrowers to preserve their own cash to use as they see best.
Loan Purposes for Private Lending in Australia
Private lending in Australia can be used for a range of loan purposes, including bridging finance, cashing out equity, distressed construction loans, notice to complete loans, wind up notices, first and second mortgages, tax debt loans, plant and equipment finance, caveat loans, and development finance.
Is Private Lending a Good Idea?
The decision to use private lending is a personal one, and depends on the individual circumstances of the borrower. While private lending can offer faster access to a line of credit and increased flexibility in loan terms and repayment options, it is also considered a higher risk option compared to traditional banking.
Borrowers should always thoroughly research and compare private lending options before making a decision, and seek professional financial advice if necessary.
Benefits of Private Lending
One of the biggest benefits of private loans is the faster access to finance and or bridging finance it provides depending on your business’s circumstances. Some private lenders are able to provide loans in as little as 24 hours, and can offer more flexible loan terms and repayment options compared to traditional banking options.
Risks Associated with Private Lending
While private loans can offer many benefits such as fast access to a line of credit for your business and a flexible loan, it is also considered a higher-risk option compared to traditional banking. Borrowers should be aware of the potential drawbacks of private lending, and thoroughly research and compare private lending options before making a decision.
Private lending is not regulated by the government in the same way as traditional banking. It is important to seek professional advice to ensure the lender you’re considering has a good reputation, does not behave in a predatory manner and has a track record of providing loans that match your purpose and amount required.
Private lending in Australia has become a viable alternative to traditional banking as it offers borrowers a more flexible solution to their financial needs with quick loan approval.
Borrowers should always thoroughly research and compare private lending options, and seek professional financial advice if necessary, before making a decision. While private loans may not be the right choice for everyone, it is an option worth considering for those in need of quick and flexible financing.
With a range of loan options, including bridging finance, cashing out equity, and development finance, darkhorsefinancial.com.au are experts to help you find the right solution for your financial needs.
If you need fast access to a line of credit for your business with a secured business loan, darkhorsefinancial.com.au can help. Talk to us by sending us a quick enquiry here.
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