The Top 3 Advantages of Private Lending

Has this been you?

You have a brilliant idea for your business or the opportunity to buy a property that is too good to miss. The stars have aligned and everything is in place. You just need a capital injection to get you over the line.

What are your options for funding?

We can split your options into bank, non-bank and private lending. Both do exactly what they say on the tin. Bank and non-bank lending generally involve finance from a large depositing institution, like ANZ or Westpac, or a large investment institution listed on the sharemarket. They are enormous organisations with sometimes unwieldy credit criteria due to their sheer size.

Private lenders are credit providers that don’t take deposits from retail customers (aka mums and dads) and therefore are not as large, or have onerous regulatory oversight. This is the realm of private lenders. Private lenders can provide fast, accessible funding when you need it. But why choose a private lender over the banks?

Commercial credit assessment.

Private lenders have different credit licensing requirements under ASIC. This allows us to be more commercially minded in our borrower assessment. We look at the specifics of your deal and the people we are working with. Our smaller, focused teams give you personalised service and take the time to see you as an individual. Unlike the banks, we don’t throw textbook-sized lists of requirements at you.

We eliminate the hurdles and get to the heart of the deal quicker.

You can get more leverage if your business generates good cash flow and you have strong security supporting your loan. As a property-backed lender, Sparrow Loans is open to borrowers with equity in another property asset. This streamlines the lending process and makes getting approved the first time easier. Getting rewarded for your strength as a borrower is a key benefit of private lending.

Control and flexibility.

When you work with a private lender, the loan term depends entirely on you and your needs. Unlike banks, we don’t force you into long loan terms with break costs. You can choose to have a loan for a month, a year, or even two. The duration is completely up to you (though it will be more expensive than a commoditised loan, it is much more flexible – use this wisely!)

Furthermore, you can negotiate terms and loan periods with a private lender to suit your purpose. The lender can determine the interest rates, and you, as a borrower, can negotiate better terms. Plus, as private lenders are smaller with more mobile capital, they will likely offer the competitive terms you are looking for.

Speed to market.

As long as you have an asset to use as security for your loan, approval and settlement with a private lender is lightning fast. We have ready access to capital and are unencumbered by the paperwork and processing delays you might see with the banks. This means you can settle a loan in days or weeks versus the months it would take with a bank.

This speed can be everything when dealing with fast-moving industries like property or professional services. It might be the difference between moving forward with your business plans or returning to the drawing board and starting from square one.

Furthermore, private lenders are more willing to think outside the box. We are experienced in dealing with unusual situations and organising structures that sit outside the realm of conventional finance. This makes us agile, switched-on, and commercially minded – the qualities you should look for in a lending partner.

Private lenders might be the best option for you.

Whether you are a business, a real-estate investor, or a seasoned property developer, a private lender is a fantastic option when you’re looking for funds. We are eager to fund your projects even when the banks hesitate, and we’ll treat you as an individual.

Contact us if you think property-backed finance might be the right option going forward.

About the author

Ulrika Lobo

Ulrika Lobo is the lending specialist at Sparrow Loans and has over ten years of experience in the commercial business loan space. Ulrika co-founded Sparrow Loans to provide Australian SMEs with a faster and easier way to access finance. Ulrika is responsible for managing the lending process from underwriting to execution and settlement and post-settlement support.