How to Find a Private Money Investor
Let’s be honest–If you googled “how to find a private money investor,” you may have bigger problems than finding a private money investor.
Let me explain: many successful businesses have a tight network of fellow business people who can refer you to the right private investor–do the terms primary circle and secondary circle sound familiar to you?
These terms suggest that business owners already know private investors through friends, family, or other connections before the deal is closed.
Don’t let this intimidate you. You can still access the funds you need for your business through a private investor by connecting to investors in other ways.
Looking For a Private Investor? Meet Crivello Capital
If you did google it and were led here without knowing who Crivello Capital is–I’ll tell you.
Crivello Capital is a private investment company focused on the positive impact capital can make in communities and the lives of business owners. We place an emphasis on investing in opportunity zones, as well as investing in startups who show promise. Learn more about opportunity zones, here.
What Makes Crivello Different Than Other Private Investors?
I’m a one-man show with a no-nonsense approach. That means no red tape, no piles of paperwork, or mountains of forms. I’m here to invest wisely in companies that excite me and are making communities better.
Learn more about Crivello Capital, here.
Let’s review what private investment is and how it works so you can fully understand what I do and how it can help your business.
What Is A Private Money Investor?
A private money investor–also referred to as a private money lender– uses their private capital to finance investments. Private investors work directly with the borrowers and are not affiliated with a financial institution.
Who Is Considered A Private Money Investor?
A private lender is a person or fund that is not a bank or credit union and is not a loan broker. A private lender has money to lend directly and has their own criteria for who to lend it to.
There are three circles of private lenders. Let’s take a moment to break them down.
The Primary Circle
The primary circle is people you know: a parent, cousin, friend from high school, the pitcher from the company baseball team that throws a wicked curveball.
The Secondary Circle
The secondary circle consists of colleagues and friends of your primary circle. For example, your dad’s friend from business school, your best friend’s colleague, the company pitcher’s friend from their last job.
The Third-Party Circle
This is where I come in. The third-party circle is people you don’t personally know. This is the largest capital pool you can access and it’s full of opportunities.
Why Are Private Investors A Valuable Asset?
I’m so glad you asked. Private investors can be an attractive option for borrowers because they have different approval requirements and faster application processes than financial institutions, like banks.
Because of these differences, private investors may be more willing to work with borrowers with poor credit. Additionally, private lenders often have an informal or streamlined application process, allowing borrowers quicker access to the funds.
How Do Private Investors Work?
The process of working with private lenders will be similar to other types of loans. Borrowers apply for funding, use the funds for the designated project or purpose, and pay the loan back in installments with interest. Like loans from financial institutions, the interest rates and qualifications can vary depending on factors such as the investor, the project, and the borrower.
What Investments Do Private Investors Fund?
If you looked up what kinds of businesses private money lenders invest in, you’ll mostly see real estate investments. While private investors do commonly invest in real estate, private money, not a fund, invests in whatever it wants to invest in–that’s why it’s private.
Banks have regulations, brokers have fees, and private lenders set terms and rates based on an individual case-by-case basis.
How Do You Borrow Money From a Private lender?
First, show me what you got; present your financial information completely and accurately. I want to see the good, the bad, and the reality.
It’s tempting to make your books look better than they are but it’s probably not in your best interest; if your business is struggling because of poor financial management, it’s important to find the problem as quickly as possible so you can learn, adjust, and get better as a business owner.
How Do I Find Private Funds?
There are a couple of different routes you could take in looking for private funds and private investors.
- You could google “how do I find private funds?” for some online resources.
- You could ask other business owners. Fellow owners may work with private investors or banks that have relationships with alternative lenders.
- You could network online, at events, etc. to connect with private investors and convince them to invest in your business.
Or, you can reach out to me and tell me why investing in your business is a good idea. Apply for capital in 4 simple steps, here.
How Do I Verify a Private Investor?
That’s a good question.
Larger lending institutions can be a bit of a double-edged sword; bigger institutions will have a full, credible lending history but often set more regulations and rigid criteria for lending.
To verify private investors, you can:
- Talk to a business owner the investor previously loaned to
- Ask questions
- Meet face-to-face
- Use your judgment
- Only agree to terms you think feel are fair
A Final Word
Private money can be an attractive alternative lending option to traditional bank loans because private investors offer faster approvals, lenient restrictions and may work with borrowers with low credit scores. That being said–private money isn’t for everyone.
Private lending can be a seedy world–that’s why it’s imperative you find the right private investor for you and your business.
At Crivello Capital, we take pride in our transparent process and no-nonsense approach. We want to bring clarity back into the transactional world of corporate lending and investment. Sound good to you?
Learn more about Crivello Capital and our mission, here.
Ready to Apply for Capital?
Apply for capital in 4 simple steps, here.
Read on to learn more about Crivello and what to do if you’re unbankable.
