Direct Lending Investments has said it will provide $73 million in small business loans through Realty Mogul’s peer-to-peer lending platform, which pools money from investors to crowdfund large real estate projects.
The partnership will continue through the next three years. The downtown Los Angeles hedge fund will start with individual loans ranging from $100,000 to $350,000, though the loan sizes could increase over time.
Brendan Ross, Direct Lending’s president and portfolio manager, said the partnership with Realty Mogul was a logical extension of his fund, which invests in high-interest loans to mom-and-pop businesses.
“It gives me a chance to own loans that have collateral in them – a real asset – which is a great thing for my limited partners to know,” Ross said. “And from a marketplace lending standpoint, this is the first time that we see banks losing business to a peer-to-peer lender in collateralized loans.”
Ross said because banks are moving away from doing small business loans, it opened up room for peer-to-peer lenders, including those catering to the real estate industry such as Realty Mogul.
Realty Mogul, the Beverly Hills lending marketplace, raised $9 million in Series A funding in March and helped crowdfund $1.5 million from investors looking to purchase a stake in the Hard Rock Hotel in Palm Springs.
“This partnership marks a tipping point in the lending industry as Realty Mogul’s online crowdfunding platform is now attracting institutional level investors seeking opportunities to invest alongside our crowd of more than 12,000 accredited investors,” said Jilliene Helman, Realty Mogul’s founder and chief executive, in a statement.
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