What is “alternative” lending?
“Alternative” lenders are lenders that are not associated with a bank or credit union.
These types of lenders are also referred to as “non-traditional” lending, private lending, direct lending, asset-based soft money, and/or hard money lending.
They are generally faster and more flexible than traditional lenders. There may be a trade-off for higher rates, which might be a little higher with some lenders to a lot higher with others.
There is no such thing as a “typical” alternative lender. There are many different types of these lenders, each offering its own specialized products, with specific lending criteria and requirements.
For example, one lender may offer a rental loan at a DSCR of 1.15, another at 1.0, and yet another at .75.
A broker who knows these lenders and their lending criteria, and who understands your project, can provide value to you by saving you time, money, effort and possibly even a missed opportunity, by matching you with the best lender for your project.
How do we add value for realtors and bankers?
We understand that most realtors and bankers have their go-to lenders for their clients.
Sometimes, however, those lenders are unable, or unwilling, to look at a deal. Why? Maybe it doesn’t fit the banker’s borrower box or the client is self-employed. Maybe your client needs to close quickly, or they need a tiered capital stack to make the deal work.
That’s where we can help.
Our strength is having the ability to look at a deal across the entire capital spectrum. We have banking and SBA relationships, as well as relationships with private lenders and hard money lenders.
That allows us to close deals that your traditional lending partners cannot.
As a realtor or banker, this capability allows us to offer your clients an alternative that may just save their deal. We believe that offering your client the option of working with us on their project will help create a lasting and loyal relationship between you and your client.
What types of borrowers use brokers like us?
Not every borrower fits into the traditional lender’s borrower’s box. That’s where we come in. Borrowers often come to us when:
- The bank said “no.”
- They are self-employed.
- Their rental project has a lower DSCR than the bank will allow
- They need a tiered capital stack.
- They need to close quickly.
- They need to access the equity in one project to start their next one.
- They previous lender backed out and now they are in a rush to close the deal.
- They need access to national lenders.
- They have a unique project.
- They need flexibility in their loan product.
- They need personal relationship with a broker who will advocate for them, to move forward.
- They are an independent contractor building a spec home