If You Want to Borrow Private Funds, You Need to Do These 5 Things

The Struggle

Securing private funds can be a game-changer for your business or real estate ventures. However, it's not as simple as just asking for money and many real estate investors that take this approach find themselves struggling to get funding. To increase your chances of success, you need to follow some best practices. Here are five essential steps you should take if you want to borrow private funds.

1. Be an Open Book

Share your background, education, experience, and proof of assets, income, and credit.

Transparency is key when seeking private funds. Lenders need to trust you, and the best way to build that trust is by being completely open about your background, education, experience, and financial status. Provide proof of your assets, income, and credit. This level of transparency will make lenders more comfortable and willing to invest in you.

2. Be Proactive

Build relationships before you need money, not when you have 'the deal of a lifetime' or even just any deal. It presents as a red flag when you're rushed and reactive.

Don't wait until you have a deal of a lifetime to start building relationships with potential lenders. Being proactive means establishing connections before you actually need the money. This approach not only builds trust but also ensures that you have a network to tap into when the right opportunity arises. Rushing to find funds can be a red flag for lenders, making them hesitant to invest.

3. Articulate your MVVs

Many are running around without a clearly communicated mission, vision, or values.

Clearly defining these for yourself and your business is crucial when seeking private funds. Whether you're looking to finance a real estate project or a business venture, having a well-defined objective will make it easier for lenders to understand your needs, assess the viability of your project, and attract like-minded people to build stronger relationships for continued growth. .

4. Create a Compelling Value Proposition

What’s great about working with you?

How are you helping them? Your value proposition is what sets you apart from other borrowers. It should clearly articulate why you and your project are worth investing in. A compelling value proposition can significantly increase your chances of securing private funds by making your project more attractive to potential lenders.

5. Prepare for Due Diligence

Be prepared to provide detailed information about your project.

Due diligence is a critical part of the lending process. Be prepared to provide project financial projections, quotes, contractor licenses, business plans, and any other relevant documentation. The more prepared you are, the more confident lenders will be in your ability to execute your project successfully.

Need Help?

Capital Verified offers a service product, the Investor Passport.

What is it? It’s a 1-page presentation of your background, education, experience, assets income and credit hosted on capitalverified.com. We complete 1:1 workshops to articulate your MVVs, and your verified experience. Think of it as a third-party verified resume.

Ralph Pombo is a great success story. He was one of the first Investor Passport clients who couldn’t get a single funded deal prior to working together, despite his great resume and potential. This is a familiar story many investors face. Ralph made back his investment and some after he secured over 200k from his first private lender not even two weeks after receiving his passport. He even came back to update his passport nearly a year later, finding that even after getting significantly more experience and credibility, it continued to serve a purpose for him. Learn more about his story and other passport clients here.

Borrowing private funds can be a highly effective way to finance your projects, but it requires careful preparation and a proactive approach. By being transparent, building relationships early, defining your goals, creating a compelling value proposition, and preparing for due diligence, you can significantly increase your chances of securing the funds you need.