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Many investors are reluctant to consider a private lender, due to a number of misconceptions, according to a management and advisory firm.
According toCapital, a common perception investors and developers have is that private lending is “slow, expensive and inflexible”.
“Many of these misconceptions have grown in the past year or two as many inexperienced lenders entered the market without the resources to deliver on funding promises,” a statement from Windsor said.
“In the past few months, many of these novice lenders have exited the market, clearing the way for better outcomes from experienced finance businesses.
“In the right hands, private lending is much faster than banks; however, you do need to take the right approach to secure finance from the sector.”
The firm noted that private lenders assess each transaction on its merits “rather than take the pigeon-holed approach with a fixed credit policy that is typical of the banks”.
“And it is not subject to the whims of banking policy. For example, pre-sales are not a prerequisite for private finance,” it said.
“The banks’ slow approvals process also presents a major opportunity cost for developers who can wait up to six months or more for a finance approval.
“Private lending can deliver funds in a fraction of that time, getting your project to market faster. This approvals flexibility addresses the perception of private lending being more expensive.”