Why do brokers use private lenders?

A solution for short-term problems

Private lending is a critical and growing part of our available solutions, when working with businesses and self-employed clients. The products have become more flexible and affordable over the course of the last three years.

As credit policies have tightened in the banking sector, we’ve looked to non-bank lending as a stepping stone to solve short-term problems/challenges businesses face.

We commonly use them to bridge funding shortfalls, working capital, raise capital for acquisitions, and fund construction and development, where banks have significantly tightened credit policy due to woes faced by the sector.

John Alvarez
Managing director, Finselect Group

A speedy solution with minimal bureaucracy

Private lenders have a valuable place in the market, especially for clients with substantial equity but insufficient servicing capabilities. They offer solutions for clients who have strong asset and equity positions but do not meet traditional lending criteria.

I have turned to private lenders in situations requiring swift approval and minimal bureaucratic hurdles. Their processes are expedited, leading to faster approval and settlement times. Often, repayments are capitalised within the loan and there’s a clear exit strategy, making it a viable option for urgent financial needs.

I feel brokers should recognise that private lending offers strategic advantages, such as speed and flexibility, which traditional lenders might lack. Rates might be higher, but they are often justified by the convenience and the ability to secure loans for clients who otherwise would be declined.

The focus should be on the clients’ overall financial picture and the benefits of obtaining the necessary funds quickly and efficiently. By broadening their understanding and overcoming reservations, brokers can better serve their clients’’ needs in unique financial situations.

Dion Fernandes
Finance specialist, Emerge Finance