Is a Private Money Lender Right for My Situation?
6 minute read
January 25, 2021


For most real estate transactions, getting a loan from a bank or mortgage company seems like the most logical, familiar step. But there are many situations that make it difficult or impossible for someone to get a conventional loan from a bank. 

If you’re self-employed, a real estate investor, or don’t have the time to wait months for approval on a loan, using traditional routes isn’t feasible. In that case, what options do you have?

Private money lenders may be your best option to secure funding for your building projects or to get approval for your mortgage if you have a unique or complicated situation. Fortunately, these lenders make it a simple, smooth process grounded in common sense and strong relationships.

We’ll dig into what hard money loans are and how they work in various situations.

What is a hard money loan?

A hard money loan — also known as a private money loan — is provided by investors or individuals who make lending decisions on a case-by-case basis. This means they don’t have the long list of requirements banks use for approval. Everything is about the merits of the deal and the benefit to the customer.

Using bank statements, tax returns, or W-2s, private money lenders can quickly evaluate your financial situation. Hard money loans are asset-based, and the properties are used as collateral. This makes the transaction much simpler, and the approvals much faster.

Conventional loan requirements vs. private money loans

Conventional loans require much more documentation to prove your income, assets, debt situation, and employment status. If you’re a real estate investor trying to fund multiple projects, banks will turn you away based on property limits or even because of the amount of paperwork required to make these situations work.

Traditional lenders understandably need to know you can repay them. In addition to income, your credit score is valuable to them in determining your ability to make your payments. If you’ve made mistakes in the past or just had a string of bad luck that affected your credit score, they will have to turn you away. Even for FHA loans, which are known to be forgiving with credit scores, a good score is still required.

On top of all of that, it can take months to get approved, which real estate investors or homeowners looking to purchase a new house before selling the old one cannot wait for.

Private money lenders, however, are not concerned with several forms of employment documentation or excellent credit scores. The lenders at Marquee Funding Group simply want to know if the deal makes sense, and they want to build a relationship with you for your future projects.

Does a hard money loan make sense for me?

Real estate investors and fix-and-flip loans

Hard money loans are best for short-term projects because repayment periods typically are one to five years. This makes them perfect for real estate investments and house flipping due to the speed and flexibility required. 

With slow approval times and rigid inspections required by banks, traditional loans are rarely an option for these types of consumers. The decision-making, paperwork for multiple properties, and risks of construction loans that make banks turn people away are typical deals to private money lenders.

Hard money lenders offer:

  • Loan amounts from $50,000 to $20 million
  • Commercial, industrial, construction, and land loans
  • Single family and multi-family loans
  • Fix-and-flip or fix-and-occupy loans

Many people searching for investment property loans think teaming with an equity partner or joint venture (JV) partner is less expensive than a private money lender. However, partners often want a 50/50 split. Even if they want just 25% of the profit, it still ends up being much more expensive than a hard money loan. 

Investors should consider building a relationship with a private money lender to fund their projects.

Self-employed borrowers

Borrowers who are self-employed or perform freelance or contract work often have difficulty proving their income to banks. Traditional lenders used to offer bank statement loans and other non-qualifying mortgages, or non-QM loans. These were easier to qualify for, but during the coronavirus pandemic these loans largely disappeared from the market.

For many self-employed borrowers, a hard money loan might be their best option, since their taxes won’t reflect their ability to afford a mortgage to traditional lenders. Luckily, private money lenders will be able to quickly see the value in financing these real estate transactions.


The best-case scenario for moving into or building a new home is that you quickly sell your current home and use the funds for your next one.

However, this often isn’t the case. Sometimes the home isn’t selling, and you need to live there until you are able to move. Or, you want to build your new home and need the funds for the construction before selling your existing home.

Private money lenders will easily provide loans for these types of situations if they make sense.

Traditional lenders need detailed plans, timelines from builders, and frequent inspections to ensure everything is staying on track. Private money lenders don’t require these delays. If your project makes sense, they will help you finance it.

While a hard money loan is primarily for short-term projects, Marquee Funding Group is one of the only hard money lenders that offers long-term consumer loans ranging from 10 to 30 years, with fully amortized, or expensed, payment options.

Those affected by layoffs, legal settlements, or debt

Private money loans can work for a variety of situations that you may not even realize were an option. Consider a private loan for these purposes:

  • Consolidate debt and improve credit
  • Cash out on properties with equity
  • Legal settlements or divorce payments

In the current climate, the coronavirus has forced many people to take pay cuts or face layoffs. This naturally has impacted the ability for borrowers to pay their monthly mortgage payments or stay on top of divorce payments. As a result, this damages your credit score and affects future borrowing. 

A private money loan can help you get back on your feet, make your payments, and improve your credit. If you have assets and equity in your properties, you can keep your home and hold on to your equity, with the help of a private money lender.

Are you ready to request a private money loan?

Marquee Funding Group is a full-service mortgage banking firm specializing in private money loans. We want to help you with your unique situation and offer you a valuable alternative to institutional financing.

Our team works with a common-sense approach to your situation. If it makes sense, we will do it. Origination, escrow, and investment sales are all performed in-house for the simplest and most efficient experience.

Contact us today to learn more about what we do and to have us review your situation. If you already know what you need, complete this form to submit your loan request, and we will contact you.

Photo by Christin Hume on Unsplash

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