The popularity of direct lenders’ funding is rising again, thanks to the investor demand for yield. When more money flows directly to the fund managers, they can write larger loans, which is appealing to borrowers. Many asset-management firms raise funds from family offices, pension funds, and institutional investors. Companies facing tough times are especially likely to find direct lenders attractive, as their loans tend to have higher interest rates. However, this type of funding requires a thorough assessment of risk and creditworthiness.
While the majority of companies that get funds from direct lenders are small and mid-sized businesses, some larger companies have turned to these sources to raise Direct lenders funding large amounts of money. In addition to small businesses, direct lenders also focus on the middle market, which represents the largest investment pool in the U.S., making up more than 50 million employees and accounting firms. Despite the growing competitiveness of direct lending, the middle market continues to be the preferred investment target for these institutions.
Those looking to move from DL to PE may find it difficult to change careers. However, mezzanine funds offer excellent exit opportunities. Those interested in moving to this industry may want to start with a job in mezzanine funds or corporate banking. These roles may be less demanding but will require additional research and preparation. The job duties are very similar to those of a conventional credit analyst. They typically involve due diligence, process work, and financial modeling. However, the volume is much higher.
Another popular nationwide direct lender is Pioneer Realty Capital. Pioneer has a network of more than 1,000 capital partners and services 40 states nationwide. They offer competitive programs, including 100% financing for 1-4 units, and an interest-only mortgage up to 80%. You can also find commercial loans, rehab loans, and rental property financing with these lenders. If you have a track record of investing, Pioneer might be able to help you finance your next project.
Traditional banks tend to lend to large corporations, while small and mid-sized businesses must look elsewhere to get the financing they need. However, the growth of direct lenders can be attributed to tighter regulations in the aftermath of the 2008-09 recession. Regulatory changes forced banks to restrict their business lending to a smaller number of companies. In fact, some experts believe that direct lending is now a $1.3 trillion market. And this growth is only going to continue as long as people realize its benefits.