Because of the risk involved, the private investment perspective via private lending of one’s money can be very frightening to those unfamiliar with private investment lending. One reason for this is one’s frame of reference. The novice private investor will most likely equate private investment lending with the loan they may have given to a relative or friend when that friend/relative was in some sort of financial emergency. Most of us have given such loans at one time or another and the yield on such loans is typically zero. More often than not, we probably lost all or at least some of the principle and never saw one red cent of earnings.
The private investment perspective of the more experienced private lender is very different. First, unlike the loan to the relative in need, the private investment lender is lending for investment purposes in a business, not to a person in distress. The private investment loan is given, not because of financial emergency but for business capitalization. All businesses run on capital and borrowing to capitalize is just good sound business practice.
Secondly, the private loans we speak of differ from the friend/relative loan in that the intent from the beginning is private investment lender profitability. The loan to the relative is generally made, not for profit, but simply to help the relative through a challenging financial period. The private investment loan, on the other hand, is not made to get the borrower through a challenging financial period but it is made explicitly to turn a profit. The whole purpose of the private investment loan is profitability. This profitable intent is not just for private investment lender profitability but also business profitability for the borrower (the revitalization specialist).
Third, the private investment lender relying upon a well grounded private investment perspective, who is lending for business purposes with the intent to make a profit — unlike the lender lending to a relative, will always SECURE the loan with COLLATERAL. Relying upon the tried and true private investment perspective, the private investment lender will tie the collateral to LEGAL SECURITY INSTRUMENTS.
Being that the intent of the private investment lender is profitability and sound business practices are followed to secure the profitability, in the natural course of events, profitability is the very likely outcome when lending to a knowledgeable revitalization specialist.