As the lending process for traditional banks has tightened, private lending—especially in the commercial real estate industry—has gone mainstream. However, with this increasing acceptance has come a heightened risk of element.
In a GlobeSt.com Q&A, iBorrow co-executive chairman Harlan Peltz sheds insight into the current lending environment, and why a more cautious approach is warranted. “The largest segment of private lending is unsecured and many investors neither understand what they own nor what happens in the event of a default,” says Harlan. He explained the risks for unsecured versus secured private loans, and that “these differences are not properly priced and may not be fully understood by investors.”