Entities offering financing outside traditional institutions, often individuals or small groups, provide capital to borrowers within a specified geographical radius. These sources frequently offer faster funding and more flexible loan terms compared to banks or credit unions, although interest rates and fees may differ. As an example, an entrepreneur seeking immediate funds to purchase inventory might utilize such a lender rather than waiting for bank approval.
These lenders can play a critical role in local economies by providing access to capital for projects or individuals underserved by conventional lending practices. Historically, they have served as an essential funding source for real estate ventures, bridge loans, and other short-term financial needs. The availability of this type of funding can empower small businesses, facilitate property development, and stimulate economic growth within a community.
