Private Money Investors in the JV Network Company network have become more cautious in their willingness to invest since the global economic crisis. Although they are still interested in placing their private money into good projects, they are taking more time to do their due diligence.

Private Money Funding At 100% Is Rare

The norm before the economic crisis was that a private investor would be willing to fund the entire project. That’s 100% funding. Now the private money investors are only willing to fund at 95% to 98%. Some private money investor may still fund a project at the 100% level, but that is rare in this economic climate.

Private Investors Use Business Trusts To Fund Projects

The other big change in the way many of the private money investors are making their offers to fund projects is that they are using a business trust type of arrangement as a means to provide funds.

Private Investors Will Provide Private Money For 95% To 98% Of Project Needs

What this means is that the request for funds will only be funded at 95% to 98% of the amount requested, and that the remaining 2% to 5% needed will have to be acquired from some other source prior to the investor giving any funds. In addition, the 2% to 5% must be in cash and placed into an escrow account before proceeding to get any funding documents prepared.

The Current Economic Climate Requires 2% To 5% Cash To Get
Big Money Funding

So in this economic climate you now need to have 2% to 5% of the funds necessary to make your project work already available prior to gaining any big money for funding a project from a private money investor in the JV Network Company’s investor network.

If this type of arrangement is something that you can live with, then the private money available through Access to Private Money may be able to get you to funding you want.

Although not all private investors use the banking system to obtain their funds to invest, many do use it.

Take the situation where the private investor has a corporation with a business line of credit.  The corporation exercises the business line to get money to invest.  Then the private investor uses those funds to make private investments.

In that case the private investor is essentially doing what the banks have been doing.  The private investor is making money on the spread of the interest rate they got on the credit line and the amount they charge to the client seeking private money.

So what happens when those credit lines are diminished or cut out entirely?

The private money dries up just like the money in the banks.  So the private sector is also affected by the banking crisis and the credit crunch.

Although I don’t’ know for certain how the investors in the investor network get their money to make investments.  It’s reasonable to assume that at least some of them are using their corporate holdings to get the cash to invest.  This means that their money supply is also smaller.

So the private sector does follow the banking industry to some extent when the banks fail or refuse to make new loans or lines of credit.

There’s a recent post on The Money Code Blog which talks about how the governments are getting into the banking business and what effect that may have on the future of the whole money system.  The post, “When The Government Gets Into The Banking Business” is worth reading for the insights about what this means for the future of credit and lending.

It may even change the future of private money investors.