Ate there any restrictions on private money?

Question

lets say you are given a private loan for (x) amount. Would there be any restrictions on how often you can use this kind of financing? Must the lender be accredited? Do they have restrictions on how often they can lend their money and how much? I am talking about in general, but if you know about specific states, please tell.

Bill Gulley · Answer

Private lenders are family, personal acquaintances or those you have done past business with. They do not advertise or seek to make loans.

Issues can be in making subsequent loans, if there is an appearance of repetitious lending and it becomes more of a business operation than a casual loan or casual investor. No real issue for a borrower except in getting that investor or lender to act, if you talked them into it, you can have responsibilities beyond the loan.

Private lenders are not registered and can not charge points as points are pre-paid interest that effect the APR in TILA matters, state laws may have usury laws and pre-paid interest goes to commercial lending, meaning lending as a business operation where the lender is registered. Same with loan fees.

As mentioned, private lenders are subject to imputed tax rates if the rate charged is under the minimum to be charged at that time.

I see many asking for money on here, soliciting private funds or even HML loans.

This apparently isn't something that the SEC or finance regulators are too busy with, but if you solicit funds you can easily be tagged with selling an unregulated security. If your deal blows up with other matters, it's something that can be added to the list of charges and can be serious. I strongly suggest seeking person money, personally and take care not to state interest rates or profits for a lender to participate that can be taken as any guarantee.

This has been fully discussed in past forum posts, search "private lending".  :)

Dawn Vacek · Answer

Private money is between  you and the lender however I will note that if he lends you money the IRS will credit him with recieving interest, whether he does or not.  Learned by experience.  If it's family money there are options.  Private money comes from all kinds of places so a better answer will come if you are more specific.