A reputable private lender funds its own loans, puts every fee in a written term sheet, never asks for large upfront fees before underwriting, closes on the timeline it promises and has repeat clients who will vouch for it. At Clion Capital, 70% of our business comes from repeat borrowers, and we are a direct lender.
What Should You Check Before You Apply?
| Check | What a good answer looks like |
|---|---|
| Who funds the loan? | The lender itself, not a broker passing it on |
| Are fees in writing? | Every fee on the term sheet before you commit |
| Upfront costs | Only third-party costs like the appraisal |
| Closing timeline | A specific number of days, met by past clients |
| Draw process | Clear inspection and funding timeline |
| References | Repeat borrowers willing to talk |
What Are the Red Flags?
- Large “commitment” or “processing” fees before any underwriting.
- Terms that change after the appraisal without a clear reason.
- No physical address, no named principals, or pressure to wire money quickly.
- Promises that sound too good, like 100% financing with no cash and no review.
If something feels off, slow down. A real lender will still be there tomorrow.
Why Does Reliability Matter More Than Rate?
A lender that misses a closing can cost you the whole deal. Margins are thinner than they were, with the typical flip earning a 21.5% gross return in Q2 2026 (attomdata.com). A delayed draw or a failed close does more damage than a slightly higher rate.
Construction credit has been tightening for eighteen straight quarters, according to NAHB’s Q2 2026 survey (eyeonhousing.org). In tight markets, lenders that change terms late are a bigger risk. Certainty is part of the price.
How Can You Verify a Lender’s Track Record?
- Ask how many loans they closed in the last 12 months.
- Ask for two or three borrower references.
- Search public records for loans recorded in the lender’s name.
- Ask who will be your contact from term sheet to payoff.
Business-purpose loans are exempt from many consumer mortgage rules (consumerfinance.gov), so your own diligence matters more.
What Does Clion Capital Offer?
We are a direct lender with fix-and-flip rates from 9.00%, new construction from 9.25% and rental loans from 7.00%. Origination starts at 1.00%, plus a flat $999 underwriting fee. Term sheets come within 24 hours, and our principals work with every borrower.
Read how to compare private lenders, mistakes to avoid and why borrowers come back. Get your rate at apply.clioncapital.com.
A red flag in numbers: a lender asks for a $5,000 commitment fee before reviewing a $286,750 loan. A reputable lender asks only for third-party costs like the appraisal up front, and puts its own fees, such as our 1.00% origination and $999 underwriting fee, on the term sheet.
Frequently Asked Questions
How do I know a private lender is legitimate?
Check that it funds its own loans, names its principals, puts every fee in writing and has borrowers who will serve as references.
Should I pay fees before underwriting?
Be careful. Third-party costs like appraisals are normal. Large commitment fees before any review are a red flag.
What is a direct lender?
A lender that funds loans with its own capital. Clion Capital is a direct lender.
How can I check a lender’s track record?
Ask for loan volume, references and closing times, and look up recorded loans in public records.
What makes a lender reliable?
Consistent terms from quote to closing, closings on the promised date and fast draw funding.
Last updated October 27, 2026.
Sources and References
- ATTOM: Q2 2026 U.S. Home Flipping Report
- NAHB Eye on Housing: Cost of Credit for Builders Up Since the End of 2025 (AD&C Survey, Q2 2026)
- CFPB: Regulation Z §1026.3, Exempt Transactions
- Clion Capital: about us
About the Author
Clion Capital is a direct private lender for professional real estate investors, offering fix-and-flip, bridge, new construction and DSCR rental loans. Our principals work directly with every borrower, and 70% of our business comes from repeat clients. See your rate instantly at apply.clioncapital.com or learn more about Clion Capital.