“Banks fund clean files.  Private money funds real life.”

1) When You Need Speed, Certainty, or a Deadline Save

Private money shines when the clock is real, and the consequences are expensive.

• Payoff loans coming due / past due (1st, 2nd, 3rd liens; owner-occupied and non-owner)
• Refinance to stop default pressure and avoid penalties, extensions, or deal collapse
• Bridge financing while you stabilize income, repairs, occupancy, or documentation

“A low rate won’t save a dead timeline.”

2) When Your Credit Is Marginal—but You Have Equity

Private lenders often lend with an equity-first mindset.

• Borrowers with marginal or poor credit, where protective equity drives the approval
• Scenarios where the Borrower needs time to rebuild credit and later refinance into bank terms

“Private money doesn’t need perfect credit—it needs protective equity.”

3) Debt Consolidation & Payment Relief (Short-Term Breathing Room)

Used to lower monthly obligations and create time to improve finances.

• Consumer debt consolidation
• Business debt consolidation
• Mixed consumer + business use cases
• If structured as a 2nd lien, borrowers often look at the blended cost via a “net effective rate” (weighted average across liens)

“Sometimes the win isn’t a lower rate—it’s a lower monthly burn.”

4) Limited-Doc & Bank-Statement Lending (Prove Ability to Pay)

For borrowers who can pay—but don’t fit “standard” documentation.

• Limited document loans: often application + credit + 3–6 months bank statements
• Cash-based small businesses: typically require 3–6 months of personal + business statements

“If the income is real, private lenders can follow the money—even when banks can’t.”

5) Property Condition Problems: Fix It First, Then Go Bank

Banks often want the property “clean.” Private money funds the transition.

• Construction completion (partially completed projects)
• Rebuild/upgrade properties in poor or marginal condition
• Approval may be considered as-is value + as-completed value (especially when improvements are required to qualify for conventional financing later)

“Private money is what you use to make the property bankable.”

6) Cash-Out Against Equity (Business or Consumer Use)

When the Borrower has real estate equity and needs liquidity.

• Cash-out refinances for business or consumer purposes (note: consumer-purpose lending can require specific licensing in some jurisdictions)
• Junior liens / second-position loans for business purposes on owner or non-owner-occupied property

“Equity is leverage—private money lets you use it.”

7) Special-Purpose, “Weird,” or Hard-to-Underwrite Properties

Banks dislike unique collateral.  Private money often prices it rather than rejects it.

• Special-purpose properties: churches, synagogues, restaurants, bars
• Automotive repair/body shops
• Gas stations/carwash / mini marts (often combine real + personal property)
• Small mobile home parks/trailer parks that fail institutional boxes
• Properties with easements, ingress/egress issues, or reciprocal parking agreements

“If it’s not cookie-cutter, banks freeze.  Private money adjusts the terms.”

8) Investor Plays: Buy, Fix, Reposition, Refinance

Private money is often the tool behind value-add execution.

• Fix-and-flip loans for experienced high-frequency buyers
• Retail strip/community centers needing upgrades or repositioning after vacancy shocks
• Industrial or commercial assets requiring capex or operational turnaround
• Airbnb/short-term rental income scenarios where lenders want financials and History
• Long-term lease expiration risk (especially when an anchor tenant rollover threatens income)
• Complex multi-tenant lease analysis (different lease terms, escalations, provisions)

“Private money is the bridge.  The refinance is the destination.”

9) Land, Development, and Entitlement Work

Raw land is harsh for banks.  Private money can fund the path to bankability.

• Unimproved raw land (infill lots vs. larger future-development parcels)
• Using land equity to fund entitlements: engineering, architecture, reports, and fees
• Payoff often occurs through a construction loan once fully entitled

“Private money funds the ‘before’ phase—so you can qualify for the ‘real’ money later.”

10) Life Events, Legal Pressure, and Settlement-Driven Liquidity

Private capital is frequently used to address urgent, complex real estate-related human problems.

• Inherited property: distributions, legal costs, repairs before renting or selling
• Litigation settlements: buyouts, divorces, partner disputes, partition actions
• Payoff judgments and liens: tax liens, HOA dues, property tax arrears

“When the problem is urgent, the solution has to move.”

11) Note Transactions & Advanced Collateral Structures

These are sophisticated scenarios in which private capital is prevalent.

• Sell existing notes/deeds of trust to investors (often at a discount) to raise cash
• Hypothecation/pledge of a note as collateral for a new loan
• Cross-collateralization: multiple properties securing one promissory note

“Private money isn’t just lending—it’s structuring.”

12) Borrowers Outside Traditional Banking Profiles

• Foreign nationals with or without a Social Security number (often need U.S. bank account(s) and a process agent arranged during processing)

“Banks want a standard Borrower.  Private money can work with a real Borrower.”

13) Properties With Compliance or Zoning Problems (Bank Deal-Killers)

• Recorded notice of substandard condition/noncompliance
• Non-conforming properties that don’t meet current zoning/building standards

“When the title report gets ugly, banks disappear.”

Bottom Line

Private money is often best when you need speed, your situation is non-standard, or you’re funding a transition (repairs, stabilization, entitlement, or a refinance plan).  Address potential risks and downsides of private money loans, as understanding them helps build trust and support informed decisions.  “Close it fast.  Fix it right.  Refinance it cheap.”

“Close it fast.  Fix it right.  Refinance it cheap.”

“Reason”

• “Rate is trivia when the closing date is a guillotine.”
• “Equity is what private lenders trust.”
• “Banks want perfect.  Investors buy imperfect.”
• “Private money funds transitions—banks fund stability.”