Let’s start with the basics.
A private lender is a broad term. It refers to any non-bank entity that provides financing outside traditional institutional channels. That could mean a family office, a fund, a group of individual investors, a crowdfunding platform, or a capital broker that connects borrowers with lenders.
A direct private lender, however, is more specific. It’s a private lender that uses its own money to fund loans—no middlemen, no brokerage network, and no capital syndication required. In other words, a direct private lender is the source of the funds, the underwriter of the deal, and the decision-maker—all in one.
Why does this distinction matter to borrowers?
Because time, flexibility, and certainty matter.
Working with a direct lender means:
● You’re speaking directly with the people making the decision
● You can often close in days, not weeks or months
● The terms can be customized to fit your timeline, risk profile, and asset type
In contrast, a general private lender may act as a conduit, shopping your deal around, requiring multiple approvals, or packaging your loan for resale. That can delay funding—or kill the deal entirely if the capital sources fall through.
Are brokers the same as private lenders?
No.
A broker helps connect borrowers with private lenders—but doesn’t actually provide the funding. Brokers serve a valuable purpose, especially if you’re exploring multiple options or need help navigating a tough-to-finance deal. But they aren’t the ones wiring the money.
And that’s the key difference. A direct private lender is the money. A broker is a go-between.
What types of loans benefit most from working with a direct private lender?
● Land loans (especially raw, undeveloped land)
● Bridge loans for distressed or transitional assets
● Time-sensitive acquisitions (like auctions or off-market deals)
● Non-cash-flowing assets that banks won’t touch
● International real estate deals
These types of loans often fall outside the strict criteria of conventional underwriting. They require speed, creativity, and risk tolerance—qualities direct private lenders are built to deliver.
What questions should I ask to confirm if I’m dealing with a direct private lender?
● “Are you funding this deal with your own capital?”
● “Will you be making the approval decision internally?”
● “Are you the entity funding the loan, or will you be sourcing it elsewhere?”
● “Do you service the loan directly after it closes?”
If the answers are vague or the lender says they need to “shop it around,” there’s a good chance you’re not dealing with a direct source.
If you’re pursuing a complex real estate deal and need funding fast, understanding the difference between private and direct private lending isn’t just a technicality—it’s the difference between a 10-day close and a 10-week delay.
At Kennedy Funding, we’re a direct private lender. That means we underwrite, fund, and service the loans we make—no middlemen, no hidden layers, and no waiting around while someone else decides your fate.
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