Ask a high-net-worth individual to “show you the money,” and these days, it might be a whole lot of cash. An article by MSN Money dove into the changing investing habits of high-net-worth individuals (HNWIs) in response to falling stock prices, rising interest rates, economic uncertainty, and the fear of recession. According to the Capgemini Research Institute, HNWIs have been keeping their money in cash and cash equivalents at the highest rate in more than a decade.
The rise in interest rates over the past year, following a long decline over several decades, has created an opportunity for savers to earn a yield on their cash. HNWIs have increased their allocation to cash and cash equivalents, with 34% of their wealth held in these assets in 2022, up from 24% in the previous year according to the article.
Alternative ways to make your money work for you by earning passive or semi-passive income on it is an attractive way to build wealth.
In today’s ever-evolving financial landscape, business owners and commercial real estate investors often seek alternative financing options that can provide them with the necessary capital for growth and expansion.
This creates a lucrative opportunity for hard money lenders to put their cash to work and earn passive income with reliable borrowers.
Our Innovative Capital Income Fund (ICIF) does just that. We do the heavy lifting and find reliable borrowers for business and CRE seeking private capital from our debt pool. It is a win-win situation and allows both lenders and borrowers to get creative with their business financing.
Whether you are seeking a fast real estate loan to support your business, or are looking to lend to expand your portfolio, here are 10 benefits of private capital:
Flexibility in Deal Structuring: A hard money loan offers greater flexibility in deal structuring compared to traditional lenders. Business owners and real estate investors can negotiate terms and conditions that align with their specific needs, allowing for customized financing solutions.
Quick Decision-Making Process: Unlike traditional lenders, hard money lenders often have streamlined decision-making processes. This speed enables business owners and investors to seize opportunities quickly, ensuring they don’t miss out on time-sensitive ventures.
Access to Expertise: Hard money lenders often have industry-specific expertise and experience. They can bring valuable insights to the table, supporting business owners and investors in making informed decisions and navigating complex financial transactions.
Higher Loan Approval Rates: Traditional lenders have stringent eligibility criteria, making it challenging for many businesses and investors to secure financing. Hard money lenders are more open to evaluating the potential of the project rather than relying solely on credit history, resulting in higher approval rates.
Diverse Funding Sources: Hard money loans, also referred to as private capital, is derived from various sources, including high-net-worth individuals, family offices, and institutional investors. This diversity minimizes the reliance on a single funding stream, reducing the risk associated with traditional bank financing.
Enhanced Risk Mitigation: Hard money lenders perform comprehensive due diligence on potential investments. This rigorous assessment process helps identify and mitigate risks associated with business ventures or real estate projects, contributing to a more secure investment environment.
Long-Term Partnership: Hard money lenders are more inclined to build long-term partnerships with business owners and investors. Their focus extends beyond providing capital; they actively support growth, offer strategic guidance, and foster relationships that can unlock additional opportunities in the future.
Access to Network and Resources: Hard money lenders (such as the Innovative Capital Income Fund) often have extensive networks and resources that can add value to business owners and investors. Leveraging these connections can open doors to new markets, potential customers, and valuable industry insights.
Higher Returns on Investment: Private capital investors typically seek higher returns compared to traditional lenders. Business owners and investors can benefit from this appetite for better yield, potentially increasing their profitability and overall success.
Non-Traditional Collateral: Unlike traditional lenders who often require extensive collateral, hard money lenders may be open to alternative forms of security. This flexibility allows business owners and investors to leverage their intellectual property, future revenues, or other assets that might not be considered by traditional lenders.
Private capital/hard money has emerged as a safe alternative with a better yield for business owners and commercial real estate investors seeking financing.
As the financial landscape continues to evolve, we encourage business owners and investors to consider hard money loans as a reliable financing solution, and lenders to consider it for its advantageous returns.
Through the ICIF (Innovative Capital Income Fund), we match hard money funds from our lenders to qualified, reliable individuals in business and commercial real estate. With attractive returns through passive income, being part of the ICIF is a great way to expand your wealth.
Join the ICIF today. Learn more information about the ICIF here.
Get a Free Quote
- Your Title Goes Here 50%