If you’re the owner of a small or medium-sized business and you’re looking to secure a business loan, then exploring your options with private loan companies could be a great way to inject funds into your organisation.
You may have reached a point in your business operations where you need to raise additional capital in order to grow. In the past, organisations have engaged with private companies to:
- Finance construction to expand office space or open new locations
- Invest in new equipment or training material for employees
- Fund the recruitment of new talent to increase productivity
- Increase inventory to deepen stocks
- Purchase commercial property
Understanding where to begin the task of engaging a private money lender to secure a loan for your business can be a challenge unto itself. Let’s take a look at some frequently asked questions when it comes to private lending and how you can move forward with the best course of action for your business.
What is a private lender?
A private lender acts either as an individual or as an organisation, offering an alternative way for businesses to secure a loan. Instead of taking out a loan from a traditional lending institution or bank, a business will be able to borrow money from a private lender and use high-value assets as collateral against the loan. At Aquamore we act as a private loan provider to small and medium-sized businesses that are able to use residential and commercial property assets as equity, in order to obtain additional cash flow for operations.
Do I qualify for private lender loans?
Each private loan provider will have its own requirements to ensure the successful approval of funds. Aquamore operates as a private lender by offering financial solutions to commercial businesses with high-value assets but does not lend to individual borrowers. If you’re interested in obtaining a loan but are unsure if you qualify, one of our expert Aquamore consultants will be able to give you all the important information you need by calling 02 9258 8888.
What is the difference between a private lender and a bank?
When it comes to securing a loan the main differences between a traditional lending institution like a bank and a private lender all boils down to the terms in which you can borrow money. Firstly, when seeking a loan from a bank they require you to adhere to a stringent approval process that looks very closely at your credit score and borrowing history, which could result in your loan being denied. It’s for this reason many businesses will approach private loan companies, as they are much more flexible with the approval terms, even if you have a bad credit history.
Secondly, when entering into the contract stage of getting your loan secured it can become quite a lengthy process when borrowing from a bank. Getting a loan from private money lenders can often mean you’ll receive your funds much quicker than with traditional lending institutions. This can make private lenders a more appealing choice for businesses looking to inject money into their organisation in a short amount of time.
Lastly, when it comes to the lending criteria terms of your loan, banks will generally be pretty rigid whereas private lending companies will work with their clients to offer competitive rates and agreements to suit their business.
Is private lending safe?
Deciding to take out a loan for your business is a big decision and one that needs to be made carefully after considering all of the terms. Despite private loan companies offering more flexibility than banks, they are still a very reliable and ethical option for businesses looking to grow their operations.
At Aquamore we are a trusted organisation and engage with our clients by fully complying with consumer credit rules, laws and regulations. We understand that financial transactions of this nature need to be handled professionally, which is why we will always be upfront about loans and fees prior to providing you with detailed agreements.
Is a loan from a private lender secured or unsecured?
Depending on which private loan provider you engage with, companies will offer both secured or unsecured loans. Understanding the particulars involved with the borrowing terms of a secured or unsecured loan can help you decide which option will be the best for your business.
A secured loan allows businesses to borrow money by using assets as collateral. A secured loan is a great option for organisations who want to take the equity of their high-value assets to inject funds into the business on flexible terms at lower rates over a longer period of time.
An unsecured loan is for businesses that do not have assets to borrow against. They also have shorter repayment terms and higher interest rates. Generally speaking, an organisation will opt for an unsecured loan to inject money into their business when it’s immediately required or to cover emergency costs when there isn’t a lot of liquidity in the company.
At Aquamore we allow businesses to take out secured loans using high-value assets, like real estate. This type of loan is an attractive option for companies who are looking to secure substantial funding but perhaps don’t have a great credit score.
Do private lenders check credit?
One of the reasons why businesses will take out a loan with a private loan provider rather than a traditional lending institution is the ability to have flexibility with the terms of the agreement. Most private lenders will check your credit — however, their lending requirements will be a lot less strict than banks.
When deciding to take out a loan with Aquamore we offer clients the ability to take out an secured loan which will allow businesses to use the equity from assets to borrow against the funds.
How much can I loan from private money lenders?
The amount of money you can borrow from private loan companies will depend on a few variables including the size of your business, the value of your collateral asset and what kind of interest and repayment terms you can commit to. You can discuss all of these things with private money lenders before reaching a loan agreement you are comfortable with.
At Aquamore we offer clients the ability to lock in unsecured loans at a minimum of $100,000 all the way up to $5 million. When evaluating your asset we offer up to 75% LVR for residential houses, up to 70% LVR for commercial or residential apartments and up to 55% LVR for land banking. If you have more than one high-value asset we can discuss taking out multiple loans for your business.
How long are the terms of private lender loans?
If you decide to borrow money from a private loan provider you’ll have the benefit of finding a flexible repayment plan compared to the strict terms outlined with traditional lenders like banks. The length of your repayment terms will depend on whether you want to commit to a short or long contract with the lender. There are pros and cons to both options — with a short-term repayment plan you’ll generally pay higher interest rates and with a long-term repayment plan you’ll have lower interest rates. These will be important things to discuss while consulting with private lending companies to ensure you are comfortable moving forward with the contract. At Aquamore we offer repayment terms as short as 2 months through to 24-month agreements — when chatting to one of our qualified consultants you can explore all the options that might be suitable for your business.
What fees are involved with private lending?
When making an investment in your business — like borrowing money to grow operations — it’s easy to get a little overwhelmed with all of the terms, rates, fees, dollar signs and everything in between. To keep on top of the process it’s always a good idea to engage the services of a private loan provider that is totally upfront and transparent about all of the fees you will incur throughout the loan proceedings. If you decide to choose Aquamore as your private loan provider, we charge a 2.2% establishment fee and our interest rates start at 5.95% p.a.
How long does it take to get a private loan approved?
At Aquamore, one of the benefits of operating as a boutique organisation is our ability to act quickly and offer our clients an exceptionally quick turnaround on their loan application. Our flexibility means we can consult, approve, review and disburse funds to our clients between three and six weeks. However, we are committed to finding financial solutions unique to your businesses needs — our hands-on approach to private lending means we’ll be with you every step of the way.
Are there private lenders near me?
At Aquamore, we provide clients with quality loan solutions. We are a boutique lender with a proven track record for helping Australian businesses take the steps towards meaningful growth. Unlike banks and other lenders, you don’t have to wait for months to get your loan approved or disbursed. What’s more, our rates and fees are exceptionally low. Reach out to us to learn more about our range of commercial finance products tailored just for you.