A payday loans direct lender is an individual or a party other than a bank which functions without the assistance of an intermediary such as an investment bank, a broker or a private equity firm, i.e., they take care of all the parts of the process like processing an application, funding approved loans, processing approved loans and finally assuring repayment of the loan. On the other hand, an indirect payday loans lender will either collect your information and forward it to several different lenders to get your application approved, or they will process your application and then let a third party lender finance your payday loan.

Who borrows from them?
Usually small or medium-sized enterprises borrow from direct lenders. Their need for credit and lack of good alternatives gives direct lenders leverage and a chance to extract higher interest rates, generally, at least 2 % points more than they would have had to pay if they borrowed from a bank.

How to spot direct payday lenders?
To find out whether the lender is a direct one, take a look at their website giving special attention to the fine print at the bottom of the website. If it is mentioned that a third party will come into the picture for funding your loan, or that your application may be recommended to/matched with a lender, it is most probably not a direct payday lender.

Why and how is direct lending a good alternative?
Where, on one hand, the banks have skewed down and reduced their lending activities to companies after being bruised by the financial crisis of 2007-2008, direct lenders are accumulating more money and capital and are open to different types of deals. About $13.3 billion was raised globally in the first quarter of 2017 which is more than half the total for 2016, according to Deloitte. The country is the largest center for direct lending, with a 61% share of the market. Therefore, this becomes a great alternative for medium-sized companies. Moreover, some direct lenders are aiming big and teaming up together to chase larger deals. They are targeting more high-profile firms.