>>60894306 (OP)
Lots of paperwork and lots of money to start. Banks cant just go to the fed and ask for money (or any other bank for that matter). You’ll need assets first.
Which means getting customers to take loans at interest rates that are profitable to you and most importantly not have to take any loan principal losses.
Lending is actually a bad business, because your loans earn ~5% interest so you make $5 million on a $100M portfolio a year. If you take a single principal loss loan, all your profits for the entire year or more can be wiped out. 100 loans at $1M each earning 5%, if just 5 loans go tits up, you’re fucked.
Compare that to 10 equity investments of $10M each, 3 of which go to $0, 3 of which barely get your money back, 3 earn a 10-20% return, and one that does a 5x. It’s better than making 75% LTV loans.
