Quick answer
Private lending is business finance from private funders rather than banks, usually secured by a first or second mortgage over property. Private lenders focus on the property, the equity and how the loan will be repaid, rather than rigid credit-scoring rules. That lets them decide in hours and settle in days, which suits urgent or unusual deals. It generally costs more than bank finance and is often used short-term.
Key points
- Private lenders lend their own or pooled funds, usually against property.
- Decisions rest on security, equity and exit — not credit scoring alone.
- Speed and flexibility are the advantages; higher cost is the trade-off.
- Often used short-term, then refinanced to a bank.
- Range
- $20,000 to $5,000,000
- Security
- First or second mortgage, or caveat
- Speed
- $20k–$250k possible same day
- Credit history
- Considered case by case
Banks lend by policy. If your deal fits the boxes, it’s cheap. If it doesn’t — a recent default, a tax debt, self-employed income that doesn’t look tidy on paper, a deadline in three days — the answer is often no, or “come back in a month”. Private lenders fill that gap. They look at the deal in front of them, mostly the property and the plan to repay, and they move quickly.
What is private lending?
In business finance, “private lending” usually means a loan from a non-bank funder secured against property — a first mortgage, a second mortgage or a caveat. The funds might come from a lending business’s own balance sheet or from investors who pool money to lend against property.
The defining feature isn’t who supplies the money. It’s how decisions are made: by people assessing a specific deal, rather than by a scoring system applying the same rules to everyone.
How do private lenders decide?
They ask three questions, roughly in this order:
- Is the security good? Location, property type, value and how easily it could be sold.
- Is there enough equity? The loan-to-value ratio must leave a sensible buffer.
- How will the loan be repaid? A sale, a refinance, business income or a known payment.
Credit history and financial statements still matter, but they don’t decide the deal on their own. That’s why private lending often suits owners with past credit problems, ATO debt, or low-doc circumstances.
How fast is private lending?
Fast, when the property side is clean. Property-secured amounts of $20k to $250k are possible on the same day, and up to $5m is possible within 24–48 hours on a straightforward deal.
| Stage | What happens | Typical time |
|---|---|---|
| Application and call | Amount, purpose, property, exit | Same day |
| Indicative terms | Based on property and exit | Hours |
| Valuation | Desktop for many deals, full for some | Hours to days |
| Documents and signing | Loan contract, guarantees, security | Same day once issued |
| Settlement | Mortgage or caveat registered, funds paid | Within 24 hours is our aim |
Bank timelines for the same deal are commonly measured in weeks. If time is the main problem, start your application and we’ll tell you on the call how quickly your property can be used.
What does private lending cost?
More than a bank — that’s the trade-off. Pricing depends on the security, the LVR, the term and the risk. Beyond the ongoing cost, look for:
- Establishment or lender fees, often a percentage of the loan.
- Valuation and legal costs, sometimes paid by the borrower.
- Minimum interest periods, which affect early repayment.
- Default charges if the loan runs past its term.
Because the cost is higher, private lending works best for a defined period with a clear exit. An illustrative example: a Gold Coast hospitality group has a strong venue but a messy year of accounts after an expansion. The bank wants two years of clean financials before it will refinance a $1.6m debt that’s due in three weeks. A 12-month private first mortgage pays out the old debt on time; the group refinances to a bank once the next year’s accounts are done.
How do you spot a reputable private lender?
Reputable lenders will:
- Give you a written offer setting out every fee and condition.
- Use proper loan and mortgage documents, registered on title.
- Expect you to get independent legal advice on the documents.
- Pay funds at settlement — never ask for money first.
Scamwatch has warned about scammers posing as lenders who demand upfront payments, such as “insurance” or establishment fees, before releasing any loan, and who ask for money to be paid into a personal bank account. If anyone asks you to pay before you’re funded, walk away. Our guide to warning signs in fast loan offers covers more.
Is private lending right for you?
It’s worth considering when:
- Time matters more than the lowest possible price.
- Your circumstances don’t fit a bank’s rules right now.
- You have property with genuine equity.
- You have a realistic plan to repay or refinance.
It’s usually not right for long-term debt you can’t see a way out of.
How long do private loans usually run?
Private business loans are commonly written for terms from a few months to a couple of years, with many sitting around six to twelve months. That’s deliberate: private lending is priced for flexibility and speed, so it’s most economical when it’s used for a defined period and then repaid or refinanced.
When choosing a term, think about three things:
- How long the exit realistically takes. A property sale often takes longer than an agent’s estimate. A bank refinance needs clean financials, which may mean waiting for the next set of accounts.
- Minimum interest periods. If the loan charges a minimum number of months, a very short planned term may cost more than expected.
- Extension costs. If you might need longer, ask upfront what an extension would cost, rather than discovering it in month eleven.
A good private loan offer sets all of this out in writing. If the term, the exit and the costs of running over aren’t clear, ask before you sign — a reputable lender will be happy to explain.
Get a decision based on your actual deal
If the bank’s checklist doesn’t fit your situation, a private lender might. There’s no credit check to enquire, your details stay with one team rather than being blasted out, and a real person looks at the property and the plan with you. Please be upfront about the credit history and the exit — accurate answers are what turn a quick conversation into a quick settlement. Apply now.
Frequently asked questions
Who are private lenders?
They range from established non-bank lending businesses to funds that pool money from investors. What they share is that they lend against property security with their own credit rules, rather than a bank's.
Is private lending safe for the borrower?
It can be, with a reputable lender and a clear offer. Read the term, fees, default terms and what happens at the end of the loan. Never pay money upfront to a 'lender' before funds are released.
Why would I use a private lender instead of a bank?
Speed, flexibility and willingness to look past credit history or unusual circumstances. Banks are cheaper when they say yes, but they can take weeks and decline deals that don't fit their rules.
Can a private loan be refinanced to a bank later?
Yes, and that's a common plan. Use the private loan for the urgent need, then refinance once the business has the documents or credit position a bank wants.