Performing note
A performing note is a loan whose borrower is making payments as agreed: current, or only briefly late, with no default. It is priced mainly on its rate, term and risk rather than on what a workout might recover.
How buyers look at a performing note
A buyer of a performing note is buying a stream of payments. It checks the payment history, the borrower and guarantor, the collateral and the documents, then prices the note against the yield it wants. If the note rate beats that yield, the note can sell at or above par; if it falls short, the buyer bids a discount (see par, premium and discount).
Definitions of "current" differ by buyer. Many purchase agreements set a test such as no payment more than 29 or 30 days late, and no event of default, at the sale date.
Why it matters to a private lender
Performing loans are the easiest loans to sell and the ones that sell closest to par. Keeping clean payment records, draw records and a complete file from day one keeps the option to sell open.
On Lender Capital
On Lender Capital, private and hard money lenders sell whole, first-lien, business-purpose loans they originated and funded, performing or not (no seller-financed notes or land contracts): a capital partner buys the entire loan and the sale settles through an escrow agent. Lender Capital never lends or buys loans with its own money. See sell your loans. Under its purchase agreement, a performing loan is one where no payment is, or has been, more than 29 days past due, and no default exists.
Where Lender Capital fits
Lender Capital places first-lien, business-purpose real estate loans with capital partners. You apply once, then submit each loan with the full file. We send it only to capital partners whose criteria it fits, one partner funds the whole loan at closing and it is assigned to them. You keep your points (less the placement fee), earn the spread above the partner’s rate and service the loan. You pay a placement fee only when a loan funds.
Lender Capital is a business-to-business platform. This page is general information, not legal, tax or securities advice. Terms of warehouse lines and other funding sources vary by provider; confirm them with each provider and your counsel.