Lender
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A steady stream of commodities and services keep coming into the market, a lot of which can be desired. Absence of available cash or money is not a problem, as a Lender can be approached. The concept of a Lender is not new, though it has assumed many forms in the modern financial world.
By definition, a Lender is an individual or an organization which arranges for a loan of money to a borrower. Traditionally, individual lenders were actively part of the financial market, but this is not so today, with the emergence of modern lending organizations.
There are many popular forms of lenders in the economy today. Commercial lenders, Mutual organizations, Hard money lenders, and Lenders of last resort– to name some.
• Commercial lenders: These are usually banking organizations, though private financial institutes also fall under this category. These organizations offer loan of money to the borrower, with some factors woven into the agreement. These factors make sure that the organization profits from the transaction, enabling it to function as a business establishment. These factors include an interest rate or amount and the period of the loan. These factors are arrived at by the organization by assessing the borrower and his or her ability to fulfill the factors in the agreement. This is an analysis of risk of defaulting of the loan by the borrower. Commercial lenders can often be approached by financial brokers who evaluate a particular borrower and his needs and take them forth to different lenders. They have a keen understanding of different kind of lenders and the type of borrowers that they normally choose. They are thus well equipped to negotiate on certain terms with the lender if dealing with a particularly lucrative loan. Bigger loans are best attained through Financial brokers
• Mutual organizations: Though mutual organizations offer loans, like commercial lenders, they work on entirely different terms. Mutual organizations attract members to deposit their moneys with them, which can be utilized to provide loans. Loans are provided strictly to members only. These organizations eliminate the factor of profit from the equation and are able to provide better interest rates for the deposits and lower rates for loans.
• Hard money lenders: These lenders provide loans backed by real estate as collateral. The rate of interest is high but since these organizations make way for many flexible ways of giving loans to different kind of projects and endeavors, they are preferred for short term loans. These lenders do not conform to any practices of banks and other financial organizations. Checks and measures, which save the banks from the risk of attaining defaulting loans, are not taken by these lenders. They are thus open to a risk, which explains the need for higher interest rates.
• Lenders of last resort: These lenders are specially appointed to save a nations economy. They provide loans to big banks and other financial organizations, which have a lot of investors’ money riding on them. They make sure that bankruptcy does not create panic and economic havoc.
Lenders exist in modern economy to make the attainment of commodity and services available to all. The mutually profitable relationship between the Lender and borrower is a sign of a healthy economy.