Hedge Fund Lenders
Hedge Funds Step in for Banks Making Loans to Businesses
In the lending void that has developed after the financial crisis, an unlikely lender has emerged: the hedge fund. While local banks have refused to make loans, some hedge funds have stepped in to provide start-ups and businesses with money. In the unlikely chain of events, hedge funds have emerged as the loan providers those hoping for economic stimulation and aid to cash-strapped small and medium-sized businesses.
With traditional lenders still avoiding risky borrowers in the wake of the financial crisis, hedge funds and other opportunistic investors are stepping into the void. They are going after midsize businesses that cannot easily raise money in the bond markets like their bigger brethren.
With traditional lenders still avoiding risky borrowers in the wake of the financial crisis, hedge funds and other opportunistic investors are stepping into the void. They are going after midsize businesses that cannot easily raise money in the bond markets like their bigger brethren.
The support is critical in a recovery characterized by high unemployment and anemic growth. These middle-market companies, which generate $6 trillion in revenue a year and employ 32 million people in the United States, are borrowing billions of dollars from the hedge funds for product development, strategic acquisitions and even day-to-day operations like payroll and utilities. Source
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