To tell a strategic debt partner from a loan-to-own shop, ask seven questions: Does the lender invest its own capital? Does it underwrite your exit? Will it show you references? Are the terms in the term sheet the terms at closing? Who services the loan? What happens if you hit unforeseen trouble? And does it lend in markets it actually knows?
A loan-to-own lender profits when you fail; a strategic partner profits when you succeed. The cleanest tell is skin in the game — a lender with its own money in the deal is structurally aligned with your repayment.
Walk the seven questions in order. Own capital in the deal aligns incentives. Underwriting your exit means they care how it ends. References and term-sheet-to-closing consistency reveal whether they keep their word. Who services the loan, and how they handle unforeseen trouble, tells you what a hard month would actually feel like. And lending only in markets they know firsthand signals discipline over volume.
The red flags are the inverse: no skin in the game, vague or shifting terms, no references, and a suspicious eagerness to lend against a property worth far more than the loan itself.
Bring these questions to any private lender. We built our model to answer all seven the right way.
Own real estate and need capital? Get an instant read on fit — see if your deal qualifies → (60 seconds, no contact info needed), or get a term sheet →.
Related: Bridge loans · Lending in Colorado