“Lending” means taking some amount of money from someone who has it and then again after sometime repaying the amount to the lender. Direct lending is a provision of corporate debt where they take loans from lenders or lending agencies other than the banks. Here the companies need no intermediaries such as the investment bankers, brokers along with any of the private equity firms. The firms who avail the direct lending services are the small and medium scale organizations. All these companies are not large and are not listed in the stock market to draw money from the market. The people who play the role of the direct lenders are the wealthy individuals of the locality or the asset management companies of the country. Most of the time the amount of loan doesn’t exceed more than Rs. 1 crore.
The Direct Lenders
As we have said earlier that the direct lenders of the business can be the wealthy people of the country or the asset management companies of the area. Asset management is the function of management and governance of the assets an individual owns. They also realize the value of these assets and suggest the owner about the dealings of the assets to get the best benefit out of it. Asset here doesn’t only refer to the tangible things that the company owns but the intangible ones too like goodwill and market share of the business entity. Managing assets deals with the function of development, operation, maintenance, up-gradation, and disposition of the assets to obtain the best value of it.
What is Direct Finance?
In the case of direct finance, the needy enterprise borrows money from the lender s directly without any of the middlemen. Basically, the direct lenders buy securities of the company to make the money available to the company. Sometimes through the direct lenders don’t go for any asset transaction. For example, if the Government is issuing bonds to the market and drawing money from there, the buyer of the bond is the direct lender.
Some Companies Act as Direct Lenders
Here are some companies that work as direct lenders.
- OneMain Financial
It is one of the best companies and is very popular. It operates in and around 1600 brick and mortar locations throughout the United States. They also serve their customers through online services to lend amounts ranging from $ 1500 to $ 20,000. They also take a fixed rate of interest on them and they don’t charge any processing fee from the borrower.
This is one of the finest companies to be a direct lender to the small scale business enterprises. They work basically in the fund installment loans which are dependent on some traditional and non-traditional criteria. They also make you loans available ranging from $ 1000 to $ 50,000 and the interest rates vary from 5.59% to 35.99%.
It is also a company to lend you money directly up to $ 40,000 at an interest rate of 6.95% to 35.89%. They charge no processing fee on this.