How to Start a Private Debt Fund
Fund formation for hard money, bridge and private credit lenders
From deal-by-deal lending to a fund
Many lenders start by funding loans one at a time from their own capital or from a few investors who participate deal by deal. A debt fund lets you raise once, lend many times, and offer investors a steady yield instead of a string of separate notes. It also brings fund-level obligations: offering documents, investor reporting, adviser status and, depending on the loans, state lending licenses and usury limits.
We form debt funds for hard money lenders, bridge lenders and private credit managers, and we structure them around the loans you actually make.
What is a private debt fund?
A private debt fund is a pooled investment vehicle that makes or buys loans rather than buying equity. Hard money funds lend against real estate, usually short term and secured by a first lien, to borrowers who need speed or who don't fit bank underwriting. Bridge funds lend for the gap between a purchase and permanent financing or a sale. Returns come from interest and fees, and investors are typically paid a preferred return from loan income. Structures range from a single limited partnership to funds with separate note and equity classes.
What we do
• Form the fund, general partner and management company
• Draft the offering documents and investor agreements, including preferred return and distribution waterfall terms
• Advise on lending license requirements, usury rules and lender exemptions in the states where you lend
• Prepare or review loan documents, participation agreements and servicing arrangements
Lending from a fund instead of deal by deal?
Tell us what you lend on, in which states and to whom, and we'll propose a structure and a flat fee. Or call +1 (202) 556-4455.