Financial firms that lend money directly to people are called direct lenders. Since they are not required to pay commissions to brokers or other intermediaries, they can offer competitive short-term loans at rates and conditions. They can also give you the best loan program that meets your needs.

Costs

Direct lenders cut out the intermediaries, which reduces lending costs. They can offer competitive rates for short-term loans because they do not pay commissions to brokers or other intermediaries. Moreover, they often have more flexible lending criteria and can provide financing to your unique financial circumstances. Similarly, direct lenders can process loan applications faster than banks because they do not need to wait for multiple layers of approval to sign off on a deal. In addition, they better understand the companies they fund, which helps them make informed investment decisions.

Flexibility

Direct lenders like MaxLend can offer more flexible loan terms for consumers with fair or poor credit. They are also able to process their loans much faster. This is because they deal directly with the consumer and can communicate quickly. Direct lending is a subset of private debt markets that took off after the financial crisis. It is a more targeted form of funding combining private equity, mezzanine, and traditional bank financing elements.

The industry has also proved attractive for investors, with yields that are not highly correlated to broader market movements and have historically outperformed corporate bonds.

Convenience

Direct lenders have streamlined loan application and approval processes, saving borrowers time. Additionally, direct lenders may offer more flexible loan terms than traditional banks. This flexibility makes them ideal for borrowers with unique or complex financing needs. The direct lending industry rose to prominence after the 2008 financial crisis. As large commercial banks retreated from lending to middle-market businesses with riskier credit profiles, non-bank financial intermediaries entered the market and have since become an integral part of the business-to-business lending landscape. Direct lenders can offer competitive rates and terms for short-term loans because they don’t have to pay commissions to brokers or intermediaries. As a result, they can pass those savings on to their borrowers. In addition, a direct lender is likely to have more experience lending to individual borrowers than a bank. This experience can help them better understand the unique needs of their borrowers. Lastly, direct lenders can offer faster processing than banks, which can be critical in a fast-moving market.

Time

You can complete the application process in days or weeks when working with a direct lender. This streamlined process allows borrowers to secure financing more quickly and capitalize on time-sensitive opportunities.

In contrast, working with a mortgage broker can take months or longer.  The demand for private debt will likely increase as buyout firms require substantial debt funding to finance large-scale LBOs. As a result, direct lenders will continue to compete with traditional banks for the market share of middle-market debt. “Direct lending” refers to non-bank creditors that make loans directly to individuals without an intermediary, such as an investment bank or a private equity firm.