Microlending. A word that has incited criticism, curiosity, charity, and praise in recent years. Microlending is the concept of gathering and pooling small funds from a multitude of individual investors in order to finance commercial ventures. Though the concept of microlending, or gathering many small funds from the masses, has been around for a long time, it has recently made headway with the birth of the internet and the rise of peer-to-peer businesses.
As of late, the peer-to-peer business model has boomed. If the term is unfamiliar, think Airbnb, Uber, Lyft, Spotify, eBay. These are businesses that create an interface, application, or website that allows users to communicate directly with each other. There are no middlemen, just the site, it’s users, and communication between these parties. So, back to microlending. After the advent of peer-to-peer software and the explosion of the tech industry, microlending emerged. Fusing peer-to-peer tech with microlending allowed not just a remote area of individuals to participate in microlending, but the whole wide world.
Individuals began to gather on microlending sites. Micro Arizona Private Money Lenders and borrowers searched for one another, funding was lent and received. Microlending became attractive for the above market interest required due to risk. Also, the fact that it typically was lent to third-world countries whose currency valued less than the US dollar allowed individuals lend as low as $25, though many argue that initial investment should be more.
Some of the challenges for peer-to-peer, Arizona Private Money Lenders include risk in lending to individuals from various regions of the world who may or may not repay. Though credit scores, credit histories, credentials, and background checks are documented on microlending sites, a lack of collateral of collateral is typically the norm. Though less money is needed to invest, there is greater risk, due to the fact that many loans are not backed by collateral. Adding to the challenges of microlending, recently institutional lenders have made their way into peer-to-peer lending. This has increased competition—Goldman Sachs versus the world of micro Arizona Private Money Lenders.
Despite these challenges some micro Arizona Private Money Lenders who spread the risks of their profiles and find consistent investment amounts report a possible average return of 7% interest. Others view that institutional intervention is a testament of the profitability of microlending. As many continue to watch the microlending market, waiting is the only option, for only time will tell what this niche of financing has in store. Opportunity, stagnation, or demise.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.