FINANCE
What’s Not to Like? The private lending space offers benefits to lenders and borrowers, alike. by Robert “Bobby” Montagne
T
he roots of private lending date back
Profitable and Scalable Investing
when wealthy landowners and feudal lords
Over the last several
thousands of years to Ancient Rome,
used their land and property to obtain collat-
years, there has been
Private lending has really come into its own
in private lending,
the Great Recession and the ensuing height-
be both profitable
Frank), traditional banks emerged bruised
ed basis with proper
otherwise necessary for entrepreneurial ven-
diligence—secure.
ways by non-traditional lenders, particularly
ever-improving tech-
Armed with market demand as well as the
of available data and
eralized loans. Fast forward to modern times.
extraordinary interest
since the economic crisis of 2008. Following
as it has proven to
ened regulatory environment (e.g., Dodd-
and—on a risk-adjust-
and gun-shy, resulting in a dearth of capital
underwriting and due
tures. That vacuum has been filled in many
Between the JOBS Act,
in the real estate sector.
nology and an influx
passage of the 2012 Jumpstart Our Business
transparency, private
to spark investments in small businesses, a
into a maturing and
seized opportunities through private place-
asset class. As a result,
lending, private REITs and so forth. Acceler-
firms and Silicon Valley techies have rushed to
resulted in availability of new capital to fix-
capital and investors a new method of achiev-
real estate investors alike.
has resulted in a lend/invest model that can be
Startups (JOBS) Act, which was designed
lending has evolved
number of new entrants have recognized and
more readily available
ments, peer-to-peer crowdfunding, direct
Wall Street investment
ated growth in the private lending space has
get into this space, offering borrowers access to
and-flippers, builders, developers and rental
ing healthy returns. This confluence of events
As a premier provider of hard money loans for
acquisitions, construction and renovation proj-
scaled and sustained across various platforms.
JOBS Act and Crowdfunding
for two decades in the development and, more
private lending space for several reasons. With
we like about the private lending space.
can now, for the first time, generally solicit
recently, private lending industries. Here’s what
38 PRIVATE LENDER
credited” and the issuers (lenders, in this case) take reasonable steps to verify that status. In
other words, this “506(c)” offering allows lenders to advertise investments in their funds or loans without the rigors of a public offering, resulting in wider access to retail accredited
investors at a fraction of the cost and regulato-
ects in the Washington, D.C., region, we at Walnut Street Finance feel privileged to have participated
private offerings, so long as investors are “ac-
The JOBS Act of 2012 revolutionized the
the passage of Title II of the JOBS Act, lenders
ry hurdles of a public offering.
Additionally, implementation of Title IV
of the JOBS Act, nicknamed “Regulation A+,” has resulted in the ability for lenders to raise
up to $50 million from the general public, i.e.,