When a Private Money Lender Might be the Right Option
6 minute read
June 30, 2021


Private money loans — often referred to as hard money loans — offer an alternative to loans from traditional financial institutions. Whether you are a real estate investor, self-employed, or even a family looking to upgrade to a new home in a short amount of time, private money lenders work with unique situations. 

If you’re having trouble qualifying for a traditional loan due to your credit score, tight timeline, or employment paperwork, a private mortgage loan could be right for you. 

What is Private Money Lending? 

A private money loan is created by a private individual or funding group rather than a bank. A private mortgage loan occurs when an individual or investment firm loans out the money, as a bank would, on a case-by-case basis that is dependent upon the borrower’s assets. The loan is then paid back in monthly installments of principal and interest payments. 

Private money, or hard money loans are asset-based and property is used as collateral, meaning these loans can be approved without the same strict standards that banks require. The value of the property used as collateral protects the lender’s investment. Bank statements, tax returns, or W-2’s can be used for proof of the borrower’s financial situation. This makes a private mortgage lender the ideal option for those with unique situations such as being self-employed. 

What’s your loan scenario?

When to Use a Private Money Lender

There are many scenarios in which a private mortgage lender might be the right option for you.

Conventional lenders often require paperwork or proof that the borrower has a consistent income. But sometimes, for investors, the self-employed, or those who may not be able to show a consistent income, it’s difficult to get approval for a conventional loan. 

A private mortgage lender is typically more understanding of these specific circumstances and will work with you based on your assets and working relationship with them. If you have successfully worked with the lender on previous projects, they’ll likely continue working with you.  

Investors that have promising investments lined up, and who need a short-term loan, will benefit from a private mortgage lender more than a conventional lender. These investments could fall under the following types of common loans: 

  • Residential rehab
  • Fix & flip
  • Bridge loans
  • Cash-out refinancing
  • Buy and hold
  • Distressed property
  • Ground-up construction
  • Land loans
  • Specialized use and/or Cannabis use property

Even if you’re not an investor, there are many different scenarios in which a private mortgage lender could help you. Private mortgage lenders are beneficial for their short-term loans, meaning that those who can’t wait around for a conventional loan to process might consider a private loan. 

Marquee Funding Group understands that there are many complex situations in which a private mortgage loan is needed. Whether you’re self-employed, a real estate investor, a house flipper, or in another unique position that makes it difficult to qualify through traditional means, a private mortgage loan can provide the flexibility and common sense you need to achieve your goals.

How Mortgage Loans Work with a Private Lender

Marquee Funding Group offers owner-occupied or non-owner-occupied consumer or business purpose loans for the following needs, when the deal makes sense. 

  • Single-family and multi-family homes
  • Fix-and-flip or fix-and-occupy loans
  • Commercial, industrial, construction, and land loans
  • Purchase money, rate and term refinance, and cash-out refinance loans

Private mortgage lenders can make sense if you’re a family looking for homeownership too. If you want to quickly sell your existing home and use those funds for a new one, the quick turnaround of a private loan will work to your advantage. 

If the home isn’t selling, and you need to live there until you can move or, you want to build a new home and need the funds for the construction before selling the existing home, private money lenders can provide loans for these situations. 

In these instances, a conventional lender will usually expect things like up-to-date timelines, frequent inspections, and other delays to the process. Private mortgage lenders won’t require this with their common sense lending. 

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

Benefits of Using a Private Money Lender

Private money lending can be beneficial to those who may be seen as a greater risk to a conventional lender. A private lender will allow the borrower to bypass the red tape of a traditional loan and start working toward their goal right away. 

Quick Turnaround

The timeline of private mortgage lending is significantly quicker than that of a traditional lending process. As an investor, it is beneficial, and sometimes even necessary, that you have a certain amount of capital up front. This allows the investor to close on more deals in a short amount of time. 

If you are needing to get a property purchased fast, whether to live in or rehab, a private mortgage lender can help you quicker than traditional lenders. 


Since a private money loan is reliant on the borrower’s assets and collateral, private mortgage lenders will typically care less about a sub-par credit score than a financial institution will. This makes private mortgage loans more ideal for those having trouble qualifying for a conventional loan. 

Banks and other traditional lenders are usually not willing to work with a borrower with a less-than-perfect credit score and who may not be able to provide proof of a traditional, steady income. Private mortgage lenders understand the unique situations that many of their borrowers are in, where they might not be able to show consistent proof of income. 

Cash for Investors

Private money lenders are able to provide cash loans that are sometimes necessary for real estate investors. Investors may use cash as a down payment to win a bidding war on bargain deals or distressed properties. Lenders from a bank won’t give you cash for your loan. 

Bottom Line

Marquee Funding Group simply wants to know if the deal makes sense. It’s important for the borrower and lender to form a relationship and create good faith for future projects. 

Get Started 

Marquee Funding Group is a full-service banking firm that offers sophisticated solutions to your individual needs. Our in-house services provide the most simple and efficient experience for our borrowers. 

Contact us with your specific private loan scenario. If the deal makes sense, we will do it. Our common sense lending approach allows us to help you with your unique situation and offer an alternative to conventional loans. 

Photo by Joshua Anderson on Unsplash

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