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Why do private lenders generally operate lower down the capital stack compared to financial institutions? Review Later Private lenders obtain funding from investors that require

Why do private lenders generally operate lower down the capital stack compared to financial institutions?

Review Later

Private lenders obtain funding from investors that require a higher return so they purposely seek riskier borrowers to fulfill that return.

Private lenders do not operate lower on the capital stack and often deal in highly secured, low-risk lending transactions.

Private lenders prefer to work with riskier borrowers in exchange for higher returns.

Financial institutions are readily accessible and are often the first place companies go for loans, leaving only more risky borrowers for private lenders.

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