While we continue to feel the hangover of the worldwide recession, there have been some positive repercussions in the form of the rise of the financial entrepreneur. Savvy individuals are successfully challenging the established banking regime and creating a new market for business solutions by proposing tailored products for fellow entrepreneurs and like-minded individuals. This includes a new breed of private lenders who are offering innovative short-term lending solutions to asset-rich clients.
Private money lenders typically have borrowing guidelines that are different, and less stringent, than those imposed by traditional lenders, banks or credit unions. These loans are typically offered at a higher interest rate than traditional loans, and investors are usually willing to pay the higher rates for simplicity and the ease of securing the loan quickly.
Private money lenders must adhere to the same licensing requirements and laws as any other lending institution, however they are not regulated in the same manner as a traditional bank or credit union and therefore do not have the strict underwriting requirements imposed by conventional lenders.
A growing worldwide trend, this business practice is rapidly increasing across Europe and the USA, the trailblazers in private money lending, especially when providing funding based on the value of a person’s real estate as collateral. Standout companies include those that look at all kinds of personal assets, including non-traditional items like pottery and porcelain; scientific instruments; stamps; private jets; photography and so forth.
This is an ideal solution for anyone who needs access to funds immediately. Banks don’t provide these personal asset loans nor do auction sites, galleries or antique dealers. This allows people who own valuable assets to be able to borrow against them with speed, privacy, and impeccable service. For too many people, much-needed liquidity – required to seize opportunities – is fixed in these languid assets.
And now this trend is also finding acceptance in South Africa where individuals are offering their art collections, luxury cars, fine wine collections, jewellery and more as collateral for immediate access to cash. This is an extremely exciting niche business and one that has also been brought about through SA’s banks reticence to lend money. Looking at alternative means to fund projects has led to valuing non monetary resources, which are now being utilised as an easy way of accessing capital.
LAMNA Financial(www.lamna.co.za), has taken its course from similar international businesses and since April 2013 has been offering South Africans confidential and discreet short-term loans against their personal valuables. A specialty finance company, LAMNA Financial replaces the bank loan and does away with any hassles that may arise from borrowing from institutions like credit checks, submitting a pay-slip, budgets, forecasts, and proof of earnings. Instead you can use your personal assets without having to sell them, to secure a short-term loan.
LAMNA Financial places value on your high-end personal assets and will raise a loan against them as security. Assets include luxury watches like a Rolex; cars as long as you are the titleholder with no outstanding debt; gold; diamonds; artwork and antiques amongst others. Assets are valued by an esteemed team of independent appraisers and clients are encouraged to have their assets appraised independently too. Items are stored at a secure premise with 24-hour armed guard security, surveillance cameras and strict security controls while some particular assets are stored off site at vaults.
Interest is payable monthly and the loan is repayable at the end of the agreed loan term. Interest is within guidelines of the National Credit Act and depends on the size and nature of the asset. When the interest and loan are repaid, your valuables are returned to you.
Private lending has gained huge momentum in international circles and when co-founder and CEO, Charles Meyerowitz exited his existing business having experienced first-hand the need for temporary cash solutions, the seed to start such a company in SA was planted. The former CEO of Dairybelle says that his experience in the dairy business taught him how small businesses in need of cash often had assets that could not could be converted into cash without selling them. “I had all these assets which I had accumulated over time but could not temporarily monetise them into cash or convince the banks to recognise them as security for my short term cash needs. Some of these assets were cars or trucks the business had paid off, some of them were personal assets,” says Charles.
Typical clients are fellow entrepreneurs. In some cases, it is an existing business that is going through a temporary cash flow issue due to growth, nonpayment of a debtor or a slowdown in activity. In other cases it is the individual who is looking at an opportunity and needs the temporary finance in order to kick it off. As lenders to mostly high net worth business people, there is no blueprint, as each transaction is uniquely assessed and a tailored solution is agreed with the client.
The growing business of money lenders is also becoming increasingly competitive around the world. What advice does Meyerowitz offer those looking for a hassle free, discreet loan? “We stand by the principles of transparency, integrity, discreetness, respect and a sound commercial understanding of the real world. And so should all private money lenders. Make sure you know all the costs upfront and you have a good understanding of the value of the asset. Ensure the company you dealing with is credible and your objectives are aligned.”
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