Quick answer
Private lending is business finance from non-bank lenders, often investor-funded, that set their own credit policies. Most private business loans are secured by property and decided by people who weigh the security, the purpose and the plan to repay, rather than strict scorecards. They are faster and more flexible than banks, cost more, and work best as a bridge back to cheaper finance.
Key points
- Non-bank lenders with their own credit policies
- Usually secured by residential or commercial property
- Faster and more flexible, but priced for the risk
- Best used with a clear plan to refinance or repay
What a private lender is
Banks lend depositors’ money under strict rules. Private lenders lend money raised from investors or their own capital, under policies they set themselves. That freedom lets them lend where banks will not: to businesses with tax arrears, past credit problems, short trading history or urgent deadlines. In exchange, they price for the extra risk and almost always want security, usually property.
How a private lender assesses a deal
| Question | What they look for |
|---|---|
| What is the security? | Property type, location, value, existing debt |
| How much is being borrowed? | Loan-to-value ratio across all debts |
| What is it for? | A purpose that helps the business |
| How will it be repaid? | Trading income, refinance or sale |
| What is the backstory? | Context for credit issues or tax debt |
Notice what carries less weight: credit scores, two years of tax returns, complex income formulas. That is the core difference.
The typical journey
- Enquiry. You describe the property, the amount, the purpose and the plan.
- Assessment. The property is assessed from sales evidence and title searches. No valuation is needed before approval on our property-secured loans.
- Indicative terms. Amount, term, security position, costs and how interest is handled.
- Documents and advice. Loan documents are prepared; independent legal advice is common.
- Settlement. The mortgage or caveat is registered or lodged and funds are released.
- The term. Prepaid or capitalised interest is available, so the business may pay nothing during the term.
- Exit. The loan is repaid from trading, a sale or a refinance.
Costs
Private loans typically include establishment fees, legal costs and interest. Because terms are often short and interest may be added to the balance, the right way to compare offers is total cost in dollars and the balance owed at the end. Be wary of focusing on any single headline figure.
Security positions
- First mortgage: the lender holds the main registered mortgage. See first mortgage loans.
- Second mortgage: registered behind an existing loan. See second mortgage loans.
- Caveat: a notice on the title, quick to lodge, which can later be converted to a registered second mortgage.
The exit is everything
Private finance works best as a bridge. Clear the tax debt, consolidate expensive short-term debts, fund the opportunity, then refinance to cheaper finance once the business and the file have recovered. When that refinance settles, it repays the private loan. Our guide to exit strategies for short-term loans covers planning the way out.
Questions to ask any private lender
- What is the total cost if the loan runs to term, and if it runs longer?
- What happens if I need more time?
- Is there a cost for repaying early?
- What exactly is being registered on my title?
- Who pays legal costs on both sides?
An illustrative example
A fabrication business owed the ATO after a year of slow-paying customers, and its bank would not lend while the debt remained. A private second mortgage over the directors’ home cleared the debt and funded new tooling, with interest added to the loan. A year later, with tax current and the business stronger, the directors refinanced with a mainstream lender, which repaid the private loan.
Talk to a person, not a portal
Use the 60-second form with your property and what you need. Enquiries carry no credit check, an expert looks it over, and your details stay private. Explore private lending.
Frequently asked questions
Who funds private lenders?
Many are funded by private investors or funds that seek a return from secured lending. Some are smaller groups lending their own capital.
Are private loans safe for borrowers?
They are legitimate contracts, but you are giving security over property. Read the documents carefully and get independent legal advice.
How fast can a private loan settle?
On straightforward deals, funding in as little as 24 hours is possible once documents are signed.
What happens at the end of the term?
The loan is repaid from trading, a sale or a refinance. Many terms are flexible if more time is needed.
Will a private loan show on my credit file?
The lender may check your credit and the loan may be recorded. Repaying it on time adds positive history.
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.