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3 Important Factors to Consider When Conducting Due Diligence on Private Lending Deals

The landscape of private lending offers many opportunities for investors and borrowers alike. However, navigating this intricate web demands more than just familiarity with finance—it calls for rigorous due diligence. But what exactly should you focus on while conducting due diligence on private lending deals? Innovate Funding, a beacon in private lending, sheds light on this pivotal process, highlighting the three essential aspects you should never overlook: due diligence on the borrower, valuations and building inspections, and the purpose of the funds.


1. Due Diligence on the Borrower: Know Who You're Dealing With

In any private lending transaction, understanding the borrower is paramount. Traditional financial institutions may lean heavily on credit scores, but the scope of private lending due diligence should be more expansive.

Personal Background Checks:

  1. Verify the identity of the borrower.

  2. Ensure you know their background in employment, personal relationships, and even social media presence.

  3. Innovate Funding can streamline this process, leveraging our resources and networks to gather reliable information.

Financial History: Obtain and scrutinise financial statements, bank records, and outstanding debt. Is the borrower financially stable? Have they successfully repaid loans in the past?

Legal Requirements: Ensure all legal documentation related to the borrower is in order. This includes contracts, business agreements, and relevant legal cases that might impact the private lending deal.


2. Valuations and Building Inspections: Assess the Asset with Propti Partnership

Whether real estate, machinery, or any other asset-backed private lending deal, valuations and building inspections are non-negotiable steps in your due diligence process. In this crucial aspect, Innovate Funding has strategically partnered with Propti, a leading name in property valuations, to offer borrowers and investors fair and honest valuations across Australia.

Valuations with Propti: A professional valuation provides a reliable estimate of an asset's market value. Propti's expertise in this realm ensures an unbiased and accurate valuation, enhancing the reliability of the lending deal. Through Innovate Funding's partnership with Propti, we connect you with this unparalleled service so you can proceed with complete confidence in the asset's true worth.

Building Inspections: A detailed building inspection is mandatory when real estate is involved. This crucial step uncovers potential issues that may not be visible immediately but could significantly impact the asset's value and, consequently, the loan terms. Innovate Funding, and its partnership with Propti ensure that building inspections are conducted meticulously, providing an additional layer of security to your private lending transaction.

Why the Propti Partnership Matters: Fair and accurate valuations are the cornerstone of any successful private lending deal. Our partnership with Propti offers a seamless and transparent valuation process underpinned by years of industry experience and a commitment to integrity. Whether you're a borrower seeking to validate your asset's worth or an investor looking for peace of mind, the Innovate Funding and Propti alliance ensures that your financial decisions are based on solid, reliable valuations.

With the added assurance brought by our collaboration with Propti, Innovate Funding continues to lead the way in due diligence for private lending deals. We ensure that every transaction you undertake is backed by an accurate and fair value, providing an essential pillar of trust and reliability in private lending.


Building for private lending

3. Purpose for the Funds: Understand the 'Why'

Understanding why the borrower needs the funds is critical in assessing the risk and viability of the private lending deal.

Investment or Business Expansion: If the funds are for business expansion or acquisition, scrutinise the business plan or investment proposal. Is it sound and viable?

Personal Use: In the case of personal loans, understanding the purpose can offer insights into the borrower's financial management skills, providing additional information for your due diligence.

Exit Strategy: A clear exit strategy should exist regardless of the purpose. How does the borrower intend to repay the loan? Innovate Funding advises that this element is meticulously detailed to protect both parties.


Conclusion: Innovate Funding—Your Due Diligence Partner in Private Lending

Due diligence in private lending is not a one-size-fits-all exercise. It's a meticulous process that demands attention to detail, a deep understanding of financial metrics, and an investigative mindset. With Innovate Funding, you're not just getting a private lending service; you're getting a due diligence partner. We guide you through each phase, ensuring that every private lending deal you embark on is built on a solid foundation of ethics, clarity, and financial viability.


As we pave the way for innovative financial solutions in private lending, we invite you to experience the due diligence services of Innovate Funding. Step into a world where your economic aspirations find the nurturing ground they deserve. Choose private lending, choose Innovate Funding—where due diligence meets financial success.


Contact Innovate Funding today to learn how we can secure your next private lending experience seamlessly.

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