Does a Private Money Lender in Houston Need a License?

money from private money lender in Houston

If you’re an individual or business looking to purchase real estate, choosing a private money lender in Houston may be a great option for you. Private lenders can provide loans when traditional banks cannot. For instance, for borrowers with low credit scores or for rehabilitating severely distressed properties. One common question we get is whether private lenders need a license to provide loans. We will explore what a private lender is and what kind of regulation and credentials they need to provide private hard money loans. 

What is a Private Money Lender in Houston?

money from private money lender in Houston
A private money lender in Houston provides loans funded by private investors.

As you may have guessed, a private money lender in Houston is much different from a bank. Private lenders provide loans from private investors. Frequently, they offer hard money loans in Houston for commercial purposes. For example, buying commercial land or renovating a distressed commercial property. 

Hard money loans are primarily based on collateral. Usually this collateral is the real estate you use it for. Because of this, there are fewer credit checks and paperwork to complete compared to loans from a traditional lender. Private lenders can provide loans to a wide range of borrowers, including individuals, investors, and organizations.

With a private money lender in Houston, your lending team can customize the loan to your needs. There are fewer hoops to jump through compared to a bank. This makes it an attractive financing option for many seasoned investors. 

Do Private Lenders Need a License?

Almost all banks and mortgage lenders need a license and must follow strict regulation about when, how, and who they can lend to. Private money lenders face fewer regulations and red tape. However, they still must follow many important regulations regarding the fees and interest they’re allowed to charge, also known as usury laws

As far as licensing goes, because hard money lenders don’t generally lend money for consumer purposes, they are primarily regulated by the state. According to the Texas Office of Consumer Credit Commissioner, regulated lenders are lenders who provide consumer loans with interest greater than 10% or more. Because some hard money lenders don’t lend to consumers or provide loans with rates higher than 10%, then some may not need a license. However, there are still many regulations and protections in place regardless of licensing. 

Fast Hard Money Loans in Houston from Texas Funding Corporation

When you need financing for commercial real estate, choose our team at Texas Funding. We specialize in hard money lending in Houston for a wide range of commercial ventures. Whether you need funds to purchase commercial land to sell or develop, an income producing property, or agricultural land to turn a profit, we have creative solutions for you. We have been providing hard money loans in Houston since 1982 and are sure we can find the right options for your needs. Get in touch now to get funding from our team.