What is it really - hard money? private money? white label? table funding?
At one time hard money and private money were referred to almost interchangeably. It was designed to be asset-based, higher leverage and quicker closing. It had almost everything to do with the deal and little to do with the borrower profile. Of course, the speed and flexibility came with costs - anyone remember 15 and 5? Hard money is still hard money but it rarely advertises. In my first role in private finance the president of lending used to joke that if you went and sat down at Wendy's long enough you could find a hard money lender.
Today the lender landscape is a lot more foggy. Everyone is advertising as a private lender, but are they really? What does it really mean?
A true private lender is one that lends funds that have full discretionary control over and services that loan themselves. That means the guidelines are exclusively theirs and they have no need to consult any other decision makers other than themselves. That is as pure a setup as you can find and is a lot more common in short term loans than longer term DSCR loans.
Many that advertise as private lenders are actually just a "white label" operation. They are lending someone else's capital, but are allowed to brand, market and close in their own name. They are not actually providing any capital or servicing the loan - they are just representing a fund or lender that already exists. They are not necessarily the advocate the borrower thinks they are. A lot of higher volume brokers have several white label agreements. It appears you are dealing directly with the decision maker, but you are not. They are a borrowers advocate only to the point of getting your loan closed - even if it's not the terms you intially discussed.
Then you move on to table funding - this is very common in my experience. A table funder is going to lend their own money, fund your loan on day one with the capital they have at their disposal, but it's either already or soon will be assigned to another lender or fund. They pay off the table funder and then take over servicing on your loan. In this way, someone with a relatively small amount amount of capital (I've seen as low as 1MM) - can recycle their capital and originate an exponential amount of loans depending on their partners and warehouse lines. The problem with this is - they are bound by the guidelines their warehouse partners impose on them. So if you need an exception - a table funder may need a week or more to get it cleared by the people who will ultimately be buying your loan or the lender will have to keep it on their own books - thus reducing the amount of capital they have for new loans. They do not want to do this.
Then there are brokered loans. In this case someone is evaluating your loan request and then ideally placing you with the best lender for your situation and acts as your advocate from pre-submission to close. Brokers don't always like to point out that they aren't actually a direct lender, and as stated earlier some will have white label agreements in place as well. Some brokers also skip the white label - but only really partner with a one or two lenders. That limits options, but a broker that sends a high volume of loans to one place can use that as leverage to really make things happen.
Some operations are one of these, or some combination of all of them. The great thing about private lending is how much you can get done in a short time with just a little creativity. I wouldn't say that any one type is necessarily better than the others - it's very subjective and very case by case. The most important part is to work with someone you like, and someone you feel you can trust. When someone shows you that they can't be trusted - believe them and move on.
In the end the question you should ask when interviewing prospective lenders shouldn't be - is it hard money or private money? It should be - who actually controls the capital you deploy? If they say they have full discretion - follow up and ask if they sell their loans or utilize warehouse lines. Most lenders will do both, but it at least lets you know what you are dealing with and who the true final decision makers are.
Good luck!