Private lenders are individuals or entities independent of the bank that provide equity and personal loans . Although they are somewhat different from bank loans, they are subject to the corresponding regulation and present guarantees that make them equally attractive financial products.
These people who grant a private loan are not affiliated with financial institutions, but act in their operations independently of them. However, they can work through consultancies whose mission is to gather enough investment to grant the loan.
How are private lenders regulated?
All companies that operate in the financial sector are governed by the framework of Law 2/2009 of March 31 , in addition to being registered in the State Registry of Financial Intermediaries.
Thus, the consultancies and companies of private lenders have legal guarantees and always offer compliance with current regulations.
In addition, private lenders also work with ASNEF and other delinquent files , since they are in charge of studying the viability of an operation based on more lax criteria, establishing their own terms and payment rules, and offering different types of conditions.
When do you go to a private equity lender?
The most common is to turn to a private lender when a traditional lender, such as a bank, rejects an operation and we need liquidity.
A private loan works in a very similar way to a mortgage in a bank. The difference is that these loans are not usually given to buy real estate, but the most common factors are to cancel a debt with ASNEF or obtain liquidity with fewer procedures, since although a person is fully solvent, in a bank the constitution processes of a loan are usually several days, weeks or months.
Another of the situations in which this type of private lenders is usually used is when we do not have a pension or payroll as guarantee of our demonstrable income, and another of the situations in which private capital is used is to be able to paralyze an auction or embargo.
How does private credit work?
There are loans without collateral or with a mortgage guarantee .
A mortgage guarantee is a kind of insurance with which the lender guarantees the collection of our debt in case of default with the payment.
When using the loan with collateral, there are different types such as, for example, the mortgage guarantee . Typically when a property is used as collateral, the property must have considerable value to cover the loan, as it will determine the amount of the loan.
The validity of private loans is adapted to the needs of the person requesting it. And, among the advantages of going to private lenders, flexibility must be highlighted .
When a private equity mortgage is made, a mandatory appraisal must be submitted to a notary's office to formalize the contract. Although the appraisal can be up to 6 months prior to the signing of said contract.
Importance of having a private loan
A private equity loan is an alternative to traditional bank financing. In fact, on many occasions it can serve as a bridge to solve a specific liquidity problem.
Private lenders with ASNEF facilitate the exclusion of this type of lists , with which we will be free later for financing through banks. For a company, having private capital can make it easier to bridge a plateau, advance promissory notes or acquire new stock for later sale.
To obtain a loan of these characteristics, it is necessary to have a property free of charges or with few pending mortgage payments , which can be your own or someone else's.
In good hands
As with everything, it is advisable to read, analyze and understand all the content of the contract before signing it and, above all, have the financial advice of professionals and experts in the sector who can guide us in the best option for our specific situation.
At Fasty Project Loans , they offer a fully personalized advisory service based on our needs, as well as financial solutions through private equity tailored to our circumstances.