Private lending is one of the fastest-growing alternative investments. It gives investors access to debt-based income opportunities outside the typical stock and bond markets. Instead of buying shares of companies, you lend money, often secured by real estate or business cash flow, and earn interest in return. Done right, private lending can diversify your portfolio and generate steady income, especially when used within a Self-Directed IRA.
Below, we explore five notable private lending platforms worth considering based on fees, reputation, offerings, performance, and accessibility for individual investors.
Top Private Lending Platforms
1. Percent – Private Credit Investing
Percent is a leading private credit marketplace that connects investors with small business and consumer loans, often offering double-digit yields on short-term note investments.
Why it works:
- Access to institutional-grade private credit deals
- Transparent deal terms and performance history
Best for: Accredited investors looking for diversified private credit exposure
2. WillowWealth – Alternative Private Credit Platform
WillowWealth is a private markets investment platform that gives investors access to asset-backed private credit opportunities across areas like real estate debt, legal finance, and specialty lending. The platform curates deals that were historically available primarily to institutional investors.
Why it works:
- Access to asset-backed private credit investments across multiple sectors
- Curated investment opportunities reviewed by the platform’s investment team
Best for: Investors seeking diversified exposure to alternative credit opportunities beyond traditional real estate loans
3. Groundfloor – Crowdfunded Real Estate Lending
Groundfloor allows individuals to fund short-term, high-yield loans with low minimums, sometimes as little as $10, making private lending more accessible.
Why it works:
- Low entry point for new investors
- Shorter loan terms for faster potential returns
Best for: Beginners who want real estate-backed lending with minimal capital
4. Prosper Marketplace – Consumer Peer-to-Peer Lending
Prosper is one of the original P2P lending platforms in the U.S., connecting individual lenders with personal loan borrowers. Investors can select loans based on credit grade and return potential.
Why it works:
- Established track record with billions in loans facilitated
- Options for varying risk levels
Best for: Investors seeking diversified consumer debt exposure
5. Constitution Lending – Short-Term Real Estate Loans
Constitution Lending specializes in short-term real estate debt, like fix-and-flip and construction financing, with many investors earning higher yields than traditional assets.
Why it works:
- First-lien loans backed by real property
- Short durations, typically 6 to 12 months
Best for: Investors looking for quicker returns backed by tangible assets
What Private Lending Is and Why It Matters
Private lending involves providing capital to borrowers outside traditional banks, usually through online platforms that connect lenders and borrowers. Instead of buying equity in a company, you act as a lender, earning interest on your capital.
Why it matters:
- Diversification because returns don’t move in lockstep with the stock market
- Income generation through interest payments
- Potential for higher returns than bonds or savings accounts
Book a free call with a self-directed retirement specialist
- Review your self-directed retirement options
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- Get all of your questions answered
Who Should Consider Private Lending
Private lending is often best suited for:
- Investors seeking income generation
- Those with experience evaluating credit and collateral
- Accredited investors for higher-threshold platforms
- Retirement investors using Self-Directed IRAs to maximize tax benefits
Risks and Considerations
While private lending can be attractive, it comes with risks:
- Liquidity risk: Investments may lock up capital for months or years
- Credit risk: Borrowers could default or delay payments
- Due diligence required: Private markets are less regulated than public ones
Investing Through a Self-Directed IRA with IRA Financial
Why a Self-Directed IRA:
A Self-Directed IRA allows you to invest in alternative assets like private lending, promissory notes, and real estate while keeping the investment within a tax-advantaged retirement account. Interest income grows tax-deferred in a Traditional IRA or tax-free in a Roth IRA, helping your retirement savings grow faster.
How IRA Financial helps:
With IRA Financial’s Self-Directed accounts, your IRA can hold alternative assets, including private lending opportunities from the platforms above or other structured deals you find. The IRA acts as the lender, collects all income, and remains fully compliant with IRS rules.
Final Thoughts
Private lending platforms offer a great way to diversify beyond stocks and bonds while generating steady income. Whether you are an experienced investor or a retirement account holder looking for alternative assets, there are opportunities for different risk levels and investment minimums.
Ready to explore alternative investing inside a Self-Directed IRA?
Request a consultation with an IRA Financial new accounts specialist today and learn how to invest your retirement funds in private lending and other alternative assets.
About the Author
Adam Bergman is a tax attorney and the founder of IRA Financial, one of the largest Self-Directed IRA platforms in the United States. He has helped more than 27,000 clients take control of their retirement savings, overseeing over $5 billion in retirement assets. Adam is also the author of nine books focused on helping investors understand and confidently manage their retirement strategies.
This article is provided for informational purposes only and does not constitute investment, tax, or legal advice. Any rankings, ratings, or opinions expressed reflect the views of IRA Financial based on internal research, listed criteria, and publicly available data at the time of publication. Rankings are subjective and may not be suitable for all investors. Readers should independently evaluate all options and consult with qualified advisors prior to making financial decisions.
FAQs About Private Lending
Can anyone invest in private lending?
Some platforms allow non-accredited investors, like Groundfloor, while others require accredited status, like Percent.
What sort of returns can I expect?
Returns vary, but private lending often targets higher interest than bonds or savings accounts.
Is private lending taxable?
Within a Self-Directed IRA, interest grows tax-deferred or tax-free depending on the account type.
How risky is private lending?
Risk depends on borrower credit quality, collateral, and loan structure. Careful due diligence is essential.
