Small Business Owners and Entrepreneurs: Building Wealth Outside Your Business
If you’re a small business owner or entrepreneur, chances are most of your wealth is tied to one thing: your company. That’s natural. Businesses demand capital, and every dollar reinvested feels like fuel for growth.
But there’s a catch. Relying solely on your business for wealth creation exposes you to concentration risk. Market shifts, regulatory changes, even one bad quarter can have an outsized impact on your finances. Building long-term security means looking beyond your company.
That’s where private lending for business owners comes in.
Why Entrepreneurs Struggle with Diversification
- Capital lock-up. Entrepreneurs often put all available cash back into the business. That leaves little left for outside investments.
- High risk tolerance. Running a company requires boldness. But personal finances shouldn’t carry the same all-or-nothing exposure.
- Time constraints. Between managing operations, employees, and clients, few owners have time to actively manage real estate, stocks, or side ventures.
- Volatile income. Cash flow in business can be irregular, making predictable outside income all the more valuable.
The solution is an investment strategy that is: passive, protective, and separate from your business cycle.
Why Private Lending Works for Business Owners
Private lending (or private credit) means investing capital into loans secured by real estate. Instead of relying on your business performance, you earn contractual interest income from borrowers who pledge hard assets as collateral.
1. Reliable Passive Income
Loans generate monthly or quarterly distributions, creating a stable stream of cash flow independent from your business revenues.
2. Collateral-Backed Security
Unlike equities or venture investments, private lending is secured by real assets. Conservative loan-to-value ratios ensure there’s a buffer protecting your capital.
3. True Diversification
Your business may face seasonal slowdowns or industry risk. Private lending, by contrast, taps into real estate and credit markets, smoothing out volatility.
4. Time Efficiency
You don’t need to underwrite loans or manage properties. A professional fund handles origination, servicing, and monitoring. You simply allocate capital and receive distributions.
Example: A Small Business Owner’s Portfolio Shift
Consider a business owner with $2 million net worth, 80% tied up in their company. By allocating $400,000 into private credit yielding 9% annually:
- That’s $36,000 in passive income per year.
- Income arrives monthly, providing liquidity even if business cash flow dips.
- Principal is protected by collateral, not the ups and downs of their company’s market.
It’s a way to protect wealth without abandoning the growth ambitions of the business.
How Private Lending Compares to Other Options
- Stocks and ETFs: Offer growth, but volatile and time-consuming to manage.
- Direct real estate: Valuable, but requires capital, maintenance, and tenant oversight.
- Private equity or angel investing: High potential upside, but also high risk—similar to owning your own business.
- Private lending: Balances yield and safety. It produces contractual income, is secured by collateral, and requires little ongoing attention.
For entrepreneurs already taking big risks in their companies, private lending often delivers the right counterbalance.
How LBC Capital Income Fund, LLC Helps Entrepreneurs
At LBC Capital Income Fund, LLC, our private debt fund is structured to meet the needs of business owners:
- Monthly distributions that create steady cash flow.
- First-lien security on California real estate loans.
- Conservative underwriting with loan-to-value ratios typically capped at 65%.
- Alignment of interests—we invest alongside our clients.
This combination makes private lending a natural fit for entrepreneurs who want wealth-building strategies outside of their own business ventures.
Building Wealth Beyond Your Company
Your business is your passion—and for many, it’s the engine of wealth creation. But no matter how strong it is, concentrating all your resources in one place is risky.
Private lending gives small business owners and entrepreneurs a way to build passive income, protect capital with collateral, and diversify without adding more to their already full plates.
For those who want to balance growth with stability, private debt isn’t just an option—it’s the strategy that makes long-term wealth sustainable. Book your call with our fund manager.
The Role of Private Debt in an Inflationary Economy
Inflation is one of the most persistent threats to wealth. When prices rise faster than income, purchasing power declines, and traditional fixed-income assets often struggle to keep pace. For investors who rely on predictable income streams, inflation can quietly undermine long-term plans. That’s why accredited investors are looking closely at private credit. In an inflationary […]
How Private Credit Complements Traditional Bonds in Your Portfolio
For years, traditional bonds were the workhorse of income portfolios. They paid steady coupons, acted as a counterweight to equities, and gave investors peace of mind. But today’s reality is different. Interest rates swing, inflation eats away at fixed coupons, and bond prices can move sharply with central bank policy. That doesn’t mean bonds have […]