In commercial real estate development, opportunity and timing are paramount. Securing the necessary capital to take advantage of an opportunity when it presents itself can mean the difference between success and failure.
Private lenders like Enact Partners are a viable and often advantageous alternative to traditional lenders like banks. This is especially important now given volatility in the banking industry which has led many banks to stop lending for business purpose loans.
Is choosing a private lender a smart move for your next commercial real estate loan? Let’s explore.
Also Read: Pros and Cons of Short-Term Business Loans
Understanding Private Lenders
Commercial real estate is a diverse and complex domain encompassing a broad spectrum of properties and projects. Each venture presents unique challenges and opportunities, from retail outlets and office buildings to warehouses and multifamily units. It’s within this dynamic environment that private lenders like Enact Partners operate.
Unlike traditional banks, private lenders are not regulated by the Federal Reserve. As a result, their lending process tends to be much easier and faster, with less red tape. Funding comes from main street investors, not Wall Street investors.
In addition, private lenders do not shut down due to macroeconomic trends, like banks and Wall Street-backed institutional lenders sometimes do. For example, during the height of the COVID pandemic and the recent banking crisis, when many banks stopped lending (in some cases right in the middle of construction projects), Enact Partners has continued lending.
Advantages of Private Lenders
1. Speed and Flexibility
Commercial real estate opportunities often demand swift access to capital. With their cumbersome processes and stringent requirements, banks can often take months or more to approve loans, stifling opportunity. Conversely, private lenders can expedite loan approvals and fund transactions in a matter of days or weeks, depending on the project and the borrower. This allows borrowers to act decisively when the right opportunities emerge.
2. Customized Solutions
Commercial real estate opportunities come in all shapes and sizes. Commercial real estate loans should too. This is something private lenders understand. Their flexibility allows loans and terms to be tailored to the unique needs of borrowers and their projects.
3. Risk Mitigation
Private lenders often adopt property-centric approaches when looking at the merits of a project. While borrower qualifications remain vital, significant emphasis is also placed on the property’s potential and viability. This can be advantageous for investors with challenging credit histories or complex financial situations.
4. Specialized Expertise
Enact Partners has decades of collective experience working in commercial real estate and commercial real estate lending. Their experience in working with a variety of projects and property types positions them as valuable partners to borrowers. They can offer insights and guidance that extend beyond the mere transactional aspect of lending.
5. Business Purpose Loans
Enact Partners focuses on business-purpose loans explicitly designed for commercial property acquisition, renovation, and/or development. This differentiates them from traditional banks and lenders who are averse to lending for business purposes.
6. Creative Financing Options
Private lenders often have more flexibility in structuring loans than traditional banks. They can offer creative financing solutions tailored to specific borrowers and their projects.
Other Considerations for Working with Private Lenders
While private lenders offer numerous transactional advantages for borrowers (as noted above), there are several other aspects to consider.
1. Transparency & Access
Private lenders like Enact Partners provide borrowers with direct access to decision makers. Borrowers get to work directly with Enact, not a nameless, faceless loan bureaucracy beholden to regulations and paperwork. Transparency and accountability are critical.
2. Win-Win Attitude
The goal of private lenders like Enact Partners is to fund projects. They want borrowers to succeed. By crafting innovative funding solutions tailored to specific project needs, borrowers feel they’ve found a partner, not an opponent. Sometimes during the process, borrowers realize additional opportunities for success. That’s a win-win.
3. Due Diligence
As responsible lenders, Enact Partners scrupulously follows due diligence on all loans. Like any lender, Enact wants to ensure that the value of the project is sufficient to cover the loan if the borrower can’t (or won’t) pay it back. Such an approach protects borrowers as well from taking on more than they can handle.
4. Marketplace Knowledge
Enact Partners has an extensive background in commercial real estate development and investment. They know how important fast, flexible access to capital is for horizontal and vertical improvements, property purchases, fix-and-flips, and other real estate-backed investment opportunities.
5. Track Record
In a world where financial landscapes can shift quickly, Enact Partners has thrived for more than a decade. Enact Partners’ 10-year journey signifies stability, experience, and a deep-rooted understanding of commercial real estate development and lending. The 10-year milestone is also a testament to the firm’s unwavering commitment to borrowers and the success of their projects, and to helping investors achieve their financial goals.
6. Diversity of Projects and Geography
Enact Partners’ portfolio represents a diversity of loan types—land, construction, property improvements, office buildings, retail, housing—and geography across multiple states and regions in the western United States. As such, a downturn in one sector or region tends to have minimal impact on their ability to fund projects.
Contact Us About Your Borrowing Needs
Enact Partners specializes in quick turnaround times, flexibility, and providing access to decision makers who can connect you to the capital you need to buy and develop property.