Direct answer: Private lending is finance supplied outside a standard bank credit pathway, often by a private credit fund, specialist non-bank lender, family office or private investor. For business borrowers it can offer a different assessment approach, but it is not guaranteed, unregulated by default, or automatically fast. Security, purpose, cost and exit still require careful review.
This page defines private lending and explains when it may fit an Australian business-purpose transaction. It does not provide a lender ranking or directory. For individual provider due diligence, use the private mortgage lender directory. For an enquiry pathway, use the private lending service.
Private lender, non-bank lender and private credit
These terms overlap but are not identical:
- Private lender: a broad label for a non-bank source of debt capital.
- Private credit fund: a managed pool that lends under an investment mandate.
- Non-bank lender: a finance company that does not hold a banking licence; it may be institutionally funded and highly structured.
- Private investor or family office: may lend its own capital, often against a specific commercial opportunity.
- Marketplace platform: connects borrowers with investors under its own legal and regulatory structure.
The legal obligations that apply depend on the lender, borrower, purpose, security and product. “Business-purpose” should never be used as a shortcut around proper legal advice or document review.
When private lending may fit
| Situation | Why it may fit | Evidence still required |
|---|---|---|
| Time-defined property settlement | A specialist credit path may assess the transaction differently | Contract, security, contribution and executable settlement plan |
| Bank refinance delay or maturity | A short-term facility may bridge to a documented longer-term outcome | Payout, conduct, reason for delay and credible refinance path |
| Business acquisition or partner exit | Property or business assets may support a defined capital event | Agreements, valuation, post-transaction cash flow and legal structure |
| Development completion gap | A lender may focus on remaining works, security and exit | Cost-to-complete, approvals, builder evidence and sale/refinance plan |
| Complex but explainable credit | A specialist may consider context outside a bank scorecard | Full disclosure and evidence that the request is still repayable |
When it is usually a poor fit
Private lending should not be used to hide an unaffordable loan, fund indefinite operating losses, defer an unresolved legal dispute, or rely on a future refinance that has not been tested. Speed does not compensate for a weak exit.
What a private lender assesses
- Borrower and control: identity, entities, beneficial owners and guarantors.
- Purpose: exact use of funds and commercial benefit.
- Security: value, title, existing debt, priority and saleability.
- Repayment: operating cash flow during the term.
- Exit: sale, refinance or another evidenced capital event.
- Execution: valuation, legal, consent and settlement tasks still outstanding.
Private lenders can weight these factors differently, but a property is not a substitute for repayment analysis.
Cost and term comparison
Compare written terms using the expected holding period and a delayed-exit case. Include:
- interest and when it is paid or capitalised;
- establishment, valuation, legal, due-diligence and broker fees;
- minimum-interest or early-repayment terms;
- extension, variation, default and enforcement costs;
- conditions before drawdown; and
- the cost and feasibility of the planned exit.
The Australian Government’s funding comparison guidance notes that non-bank lenders can have more flexible criteria but may charge higher rates and fees. A quote should therefore be compared as a complete structure.
Private-lender due-diligence checklist
| Check | Why it matters |
|---|---|
| Legal lender identity and funding party | Confirms who is providing and enforcing the loan |
| Written term sheet and full cost schedule | Reveals conditions and costs beyond marketing claims |
| Licence or representative search where relevant | ASIC’s professional registers can verify listed entities and authorisations |
| AFCA membership where relevant | AFCA warns that some small-business borrowers have fewer complaint options with non-members |
| Independent legal advice | Explains security, guarantees, defaults and enforcement rights |
| Exit feasibility | Prevents a short-term facility becoming an open-ended problem |
Not every commercial lender must appear on the same register or belong to the same dispute scheme. The absence or presence of a listing should be interpreted with a lawyer for the actual product and purpose.
A lender-ready private-finance pack
Emet Capital’s editorial checklist is to prepare one pack containing:
- a one-page transaction summary;
- entity and identity documents;
- exact use-of-funds and funds-to-complete schedule;
- current debt and security schedule;
- property, valuation and title information where relevant;
- financial statements, bank statements and tax position;
- primary exit evidence and a fallback; and
- a dated list of valuation, legal and consent dependencies.
This reduces contradictory submissions and makes offers easier to compare.
Illustrative scenario — not a client outcome
A commercial property owner has a bank facility approaching maturity while a longer-term refinance remains under assessment. A private bridge may be considered if the borrower can evidence the refinance path, service the interim period, meet the private facility’s total cost and manage a fallback sale or alternate refinance. Without those elements, the bridge may only move the maturity problem forward.
This example is hypothetical. It is not a representation of approval, pricing, timing or an Emet Capital transaction.
Main risks
- higher total cost than a suitable longer-term facility;
- short maturity and extension uncertainty;
- broad security or guarantee exposure;
- valuation and legal conditions that still delay settlement;
- default pricing and enforcement rights; and
- exit failure if refinance or sale assumptions prove unrealistic.
Next step
Related decision guides
Use the private lending service for a business-purpose scenario and provide the amount, purpose, security, required date, current debts and exit evidence. General information only; not financial, legal or tax advice.