Private Capital is a way to obtain alternative financing outside the Credit institutions.
This way of obtaining financing is achieved through investors or professional lenders who lend their money to obtain a higher return on their investments.
The method in theory “is simple”, you only need to meet a private investor, present your financing needs and agree on a term and interest rate to return the money.
Private Capital replaces other options such as the pawn of goods or the quick sale. Normally we will always have to see Private Capital as a temporary bridge solution.
Where can private equity lenders be found?
This is one of the most important parts when it comes to entering the adventure of applying for a private capital loan.
Professional lenders are not as accessible to the public as you might think, it is not because they hide anything, their main reason is to outsource investment operations that may be interesting to third parties.
Currently, the Internet has allowed the creation of a financial ecosystem (fintech) with the emergence of platforms that group professional investors. These platforms offer products to registered investors and intermediating between applicants and investors.
These platforms are usually referred to as loans between individuals, crowdlending or simply P2P lending platforms , the products that can be found can be loans, lines of credit, discounts on promissory notes or invoices, etc.
What requirements are requested?
The requirements requested by the loan platforms vary depending on the financial product they have.
There are crowfunding platforms, for companies, crowlending , advancement of invoices etc, depending on the type of financing a specific documentation is required.
It is not the same to be in a platform for companies in which promissory notes are discounted, than in another in which we request a loan for consumption.
Most have enough information to make the request from our home.
In Good Finance we offer a platform of Loans between Individuals , in which our registered users as private lenders or investors offer financing whenever the applicant (borrower) provides a property as collateral.
In this case a loan will be made with mortgage guarantee and this will be raised to the public before a notary.
Private capital with mortgage or house guarantee
Private equity with Good Lender is the most common loan model and the one that most lenders use.
The reason is only to guarantee the loan, in case of default the investment will be guaranteed thanks to the guarantee presented.
The guarantees that guarantee that an investor bets on our operation, have to be in well located areas and with a market value that allow their exit to the market in the case of sale.
A private equity lender always values the status ofpresented in relation to its geographical situation.
The best locations are usually provincial capitals or urban tourist areas with good market value.
How a mortgage guarantee is valued
This is one of the most important parts when requesting a private loan and presenting our property as collateral for the operation.
The valuation of our guarantee will depend on two factors.
- Your appraisal value.
- Its market value.
The appraisal value is a price that an appraiser of an approved company makes on our guarantee.
This appraisal will indicate the approximate maximum amount that the investor may offer on our property.
The market value will be the second variable that will influence the amount of money they can lend us.
Currently, private money lenders consult through real estate portals, the amount of properties sold in our area and the sale price according to our characteristics.
We remember again that one of the exits to a situation of default on a private loan is the sale of the property by the debtor.
The value of the appraisal value and the situation of the real estate market in our area, will value the amount of money they can lend us.
Documents required for private capital with guarantee
When we request a Private Capital loan we will have to present the documentation that indicates the ownership and the state of charges of our guarantee.
The ownership of a property is identified by the deed of ownership and its simple registration note.
The charges that appear in the simple notes indicate whether a guarantee has charges in its range or not, whether mortgages, liens or guarantees.
* Remember: you need to provide a mortgage guarantee to apply for a loan.
✔ Simple Note of the guarantees.
✔ ID of the holders.
✔ IBI receipts.
What kind of contracts are signed in Private Capital?
A good contract is essential in the signing of a Private Capital operation.
These contracts are predefined by the financing platforms, depending on the requirements of said platform these will be adjusted to the needs of the client.
On loan platforms, a contract with a typical loan format in which the conditions are represented is the document used.
When there are guarantees in between such as real estate properties, usually these types of contracts are usually signed before a notary.
All contracts must be available to clients days before signing, in order to consult them with our lawyers, consultants, etc.
Private loans without property
Private Equity loans without mortgage guarantee are uncommon and for very specific profiles.
There are only a few financial ones that allow obtaining these types of loans, but the conditions are very hard.
You need to provide significant income that guarantees investor confidence.
For cases where there is no payroll, or income and you are in the ASNEF, you can apply for the loan with the guarantee of a vehicle .
As a general rule, many people are in possession of an almost paid or fully paid vehicle.
If this is your case you can access a private loan thanks to your vehicle.
Private equity loans only with payroll
When we do not have justification of income, Private Equity loans appear as a solution to our problems.
Whenever you try to access a loan, justifying our repayment capacity thanks to our income is essential to access the money.
In private equity loans the lack of justification of income is compensated by a real estate guarantee.
The lender knows that the applicant will not lose their property due to non-payment.
What legal security do private equity loans have?
Legal certainty will be marked by the type of contract that is signed. In this case you should be more concerned with an investor who lends his money than the borrower he receives, but to be more exact, both of you have to have a legal legal framework.
Currently this legal framework will be regulated by the new Crowdlending Law, which in its preliminary bill identifies the type of investor registered on a platform and the amount of money that can be lent.
In which cases is it necessary to apply for a Private Capital loan?
As long as our access to credit is closed, access to private capital may be our only means of financing.
When we begin to request private financing, we will realize that the guarantees we can provide for the return of capital will be decisive for achieving the objective.
Therefore, if we do not have real estate with the ability to be mortgaged, shares, or guarantees that offer any security, our access to this type of financing will be limited to what we can personally offer.