India’s financial ecosystem has undergone a significant transformation in recent years. While banks and NBFCs continue to dominate the lending space, allowing only those with a good financial & credit profile to avail funds.
Many companies or individuals skip some EMIs of an ongoing loan due to financial constraints, which can negatively impact their credit profile. Even some start-up companies having a vintage of only two to three years are also not eligible for funding from regular banks & NBFCs.
So, there is an alternative financing for such credit issue companies or individuals through private funding companies. These private finance companies can lend money to such kind of low-CIBIL cases or companies having lesser financials compared to traditional banks.
In this blog, we’ll explore what private funding companies are, how they operate, the types of loans they provide, and why they are becoming a preferred choice in India.
What are Private Funding Companies?
Private funding companies are the second line of financing option after traditional banks & NBFCs that offer finance to companies/individuals who have some credit or documentary issues. They are also called private lenders. Generally, they can finance the cases that are rejected by the conventional banks or NBFCs.
Unlike banks, private lenders are
- ✅ More flexible in assessing borrowers
- ✅ Quicker in processing loan applications
- ✅ Open to funding businesses or individuals with low credit scores
- ✅ Willing to finance high-risk projects that banks may avoid
Types of Private Funding in India
Private funding companies or Private Lenders offer the following kinds of loans:
- Loan Against Property (LAP) 🏡
- Secured loans against residential, commercial, or industrial property
- NPA & OTS Funding ⚖️
- Loans to close Non-Performing Assets (NPA)
- Loan to service One-Time Settlement (OTS)
- Private Real Estate Finance 🏗️
- Builder finance
- Construction loans
- Land development finance
- Special Situation Finance 🔄
- Funding for companies undergoing restructuring, management changes, or financial stress
Key Benefits of Private Funding Loans:
- Loan amount starts from Rs.1 Crore to any higher amount required
- Loan can be raised against residential, commercial & industrial properties
- Available in all major cities
- Fast Process
- CIBIL not required
- Companies in the DRT & NCLT courts can also apply
- Online Documentation
- Balance/loan transfer available
- Availability of moratorium period
Suitable for:
- Builders & real estate developers 🏗️
- Small & medium enterprises (SMEs) 👨💼
- Business owners with urgent capital needs 💼
- Borrowers with NPA or irregular repayment history ⚖️
- Startups companies with two to three years of operations 🚀
- Individuals requiring large loans against property 🏡
Conclusion
Private funding companies or private lenders can be a good alternative to traditional banks by offering faster approvals, flexible repayment terms, and solutions for high-risk or urgent funding needs. But on the other side of the coin, it is a much costlier option than a bank.
