Private Money Lenders vs. Banks and Credit Unions

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Private Money Lenders vs. Banks and Credit Unions

You might be surprised at some of the differences in borrowing from a bank versus borrowing from a private money lender. Let’s look at those differences and how they might affect your search for real estate investment funding.

First, let’s look at the things that private money lenders and banks have in common. Both will assess the viability of the loan using three main criteria:

  1. The borrower’s payment history and credit score
  2. The borrower’s capacity to make payments, including income and bank account balance
  3. The borrower’s collateral, or any assets that can be put up to secure the loan

Lenders call these the 3 C’s — credit, capacity, and collateral. The difference between private money lenders and banks lies in how they evaluate these criteria. Banks are subject to strict regulations imposed by the federal government, so they need borrowers to fit in a very specific box. The borrower needs to have a good job, a clean credit history, and collateral to even get their foot in the door.

What to do when you don’t fit in the bank’s box

Unfortunately, many people don’t fit into this narrow box. Some are self-employed and don’t have a regular income history to point to. Others have issues with their credit scores and still others have experienced a bankruptcy, short sale, or foreclosure.

Private money lenders are small business and individuals whose hands aren’t as tied as the banks. They have the flexibility to look at each borrower on a case-by-case basis and determine risk. They’ll review the 3 C’s, but their requirements may be much lower and they may be able to incorporate mitigating circumstances into their considerations. Typically, private money loans are based more on collateral than anything else.

Finding a private money lender in Arizona

Imperfections may not work in the cookie-cutter world of the banks and credit unions, but private loans are more flexible. This is both a bad and a good thing. It’s good because it fills in the gap left behind by banks. It’s bad because it can make it hard for the average person to find the right lender for their needs. If you’ve been turned down by a bank or you don’t feel you meet their criteria, finding a private money lender in Arizona is simple. In fact, you’re already in the right place! Give us a call to see how we can help.



Dennis Dahlber Broker Ri CEO Level 4 Funding LLC
Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC 
Hard Money Lender

Hard Money Loans

Hard Money Loan

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO


NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave | Austin | Texas | 78701  

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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