Understanding PRIVATE Finance: What It Is and How It Can Benefit Your Business

When traditional financing options aren't enough to cover the cost of your project or business expansion, private funding can provide the solution. But what exactly is private funding, and how does it work? In this article, we’ll explain everything you need to know about private funding and why it might be the perfect option for your next project.

What is Private Funding?
Private funding is a hybrid form of financing that sits between your senior debt (such as your first mortgage or bank loan) and equity (your ownership share in a business or project). It is typically structured as subordinated debt, meaning it is repaid after senior debt has been cleared but before equity holders receive any distribution.

Unlike traditional loans, private funding is often more flexible, with terms tailored to the needs of the borrower. It offers businesses and property developers an opportunity to access funding without giving away ownership or diluting control.

How Does It Work?
Private loans are often structured as subordinated debt, secured against the title of your property or business. While it carries a higher risk for lenders, private funding offers higher returns, typically through higher interest rates or equity kickers (which give the lender a small percentage of ownership in the business).

For property developers or businesses seeking capital, private funding provides a valuable tool to complete projects or facilitate growth.

When Should You Use Private Funding?

• To complete a property development project when you’ve already maxed out your senior debt.

• When you want to avoid bringing in new equity partners and diluting ownership.

• If you need to preserve your cash reserves for other purposes, like operational costs or future growth.

Conclusion:
Private funding can provide the flexibility you need to complete your project or expand your business while maintaining control. By working with Ziku Equity, we can help structure a private loan that meets your specific needs, giving you the financial freedom to achieve your goals.