Private lending is when individuals or non-bank institutions (rather than traditional banks or credit unions) provide loans to borrowers. These lenders can include private investors, investment funds, or mortgage investment corporations (MICs).

Private lending is commonly used when:

• A borrower doesn’t qualify for a bank loan (due to credit issues, income structure, or timing)
• Speed and flexibility are more important than the lowest interest rate
• The loan is short-term (often 6–24 months)
• The borrower has real estate to offer as security

Interest rates are typically higher than bank loans because private lenders take on more risk and offer fewer restrictions.