Quick answer
A private lender is a non-bank lender, often funded by investors, that lends on its own policy rather than a bank's. Private business loans are usually secured by property and decided by people who weigh the security, the purpose and the repayment plan. They suit businesses with tax debt, credit problems or deadlines that banks cannot meet.
Key points
- Non-bank lenders using their own credit policy
- Usually secured by residential or commercial property
- Decisions weigh security and repayment plan, not just scores
- Flexible on credit history, tax debt and timing
Who private lenders are
Private lenders fill the space between banks and doing nothing. Some are funds backed by many investors; others are smaller groups. They share one feature: they set their own credit policy. Instead of a national scorecard, a person looks at the deal and decides whether the security and the plan to repay make sense.
How a private lender thinks
| Question | Why it matters |
|---|---|
| What is the property worth? | It protects the lender if things go wrong |
| What is already owed on it? | Sets the loan-to-value ratio |
| What is the money for? | Shows the loan will help, not just delay a problem |
| How will it be repaid? | Trading income, refinance or sale |
| What happened before? | Context for credit issues or tax debt |
Notice what is lower on the list: credit scores, two years of tax returns and complex servicing formulas. That is why private lending works for so many owners who have been declined elsewhere.
Features worth knowing
- Loans $20k to $5m secured by property.
- No valuation needed before approval.
- Interest may be paid upfront or added on.
- Flexible terms: keep the loan as long as you need it.
- Funding in as little as 24 hours on straightforward deals once documents are signed.
Using private finance wisely
Private loans are a tool, not a lifestyle. The best use is a defined purpose with a clear way out: clear the ATO debt, consolidate expensive facilities, buy the equipment that lifts revenue, then refinance to cheaper finance once the file has improved. When that refinance settles, it repays the private loan. Our guide on how private lending works walks through a typical journey.
First or second position?
If your property has no loan, a first mortgage is usual. If it has a bank loan you want to keep, a second mortgage or caveat sits behind it.
An illustrative journey
A family-owned fabrication business falls behind with the ATO during a year when two large customers paid slowly. The bank declines a new facility because of the tax arrears. The directors own their home with a modest loan.
A private second mortgage clears the tax debt and tops up working capital, with interest added to the loan so the business has no monthly repayment. Over the next year, with BAS lodged and paid on time, the business’s position improves. The directors then refinance with a mainstream lender, and that refinance repays the private loan. Private funding was the bridge back, not the destination.
Questions to ask any private lender
- What is the total cost, including establishment, legal and discharge fees?
- What happens if I need longer than the initial term?
- Is there a cost for repaying early?
- What exactly is being registered on my title?
Clear, written answers are a good sign. Vague ones are a reason to slow down.
Talk to a person, not a portal
Submit a short enquiry with the property and what you need. You can ask with no credit check, a specialist calls you back, and there is no lender auction. Ask about private lending.
Frequently asked questions
Are private lenders regulated?
Business lending sits largely outside the consumer credit laws, but lenders are still bound by general law, contract law and ASIC's oversight of financial services. Read every document and get independent legal advice.
Why do private lenders cost more than banks?
They take on deals banks decline and move faster, which carries more risk and cost. The gap narrows with strong security and a clear repayment plan.
How long do private loans last?
Many are short to medium term, matched to a refinance or sale. Terms are flexible and loans can be kept as long as needed.
Is a private loan a good long-term solution?
Usually it is a bridge back to cheaper finance. Many owners use a private loan to clear arrears and tidy up their file, then refinance once their position improves.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a person who handles unusual deals calls you back.