For ten days now, our national correspondent has been traveling by car through various national parks in the western regions of the United States. Seeing monuments like Old Faithful, Grand Teton and Mt. Rushmore would not seem relevant to private lending, but, in fact, it turned out that doing so had a direct bearing on the subject. The key point is staying power.
Most regulated lenders to private individuals are reluctant to lend for more than one or at most, two years at a time. During the discussion of terms, they are keen to point out that they are in the habit of rolling over the loan from year to year, as necessity demands, and they often do – but they are not required to do so. This is an important fact that many borrowers ignore in their eagerness to close the loan and move on. During the financial crisis of 2008/09, some private borrowers discovered that their lenders were no longer as eager to roll their loans as they might have expected. Needless to say, this change in temperament came at the worst possible time for said borrowers.
New York Private Finance is different. We require tenors of at least three years and prefer to lend for five or even six years. Why? First off, we are just nicer people, of course, but the other reason is that we want to be certain that our borrowers have reliable financing to enable them to ride out a business cycle, even one as stressful as the crisis of ’08/09. Knowing that their funds are secure for five or six ears enables them to plan for more than a year at a time and to develop plans to optimize their wealth building strategies.
Devil’s Monument may seem like an inconvenient image to align with medium term financing, but its rock-solid permanence reflects the same kind of certainty that financing by NYPF ensures. The certainty of financial staying power provides the optimal framework for our clients to enhance their wealth, which is the reason they borrow in the first place. The business world is uncertain enough, so it is best to structure financing that removes at least one worry from an otherwise long list.
Please contact us to learn how we can help.
