Quick answer
Private business loans come from lenders that use investors' money, not deposits, and lend mostly against property for short terms, usually a few weeks to a year or two. Security is a first mortgage, second mortgage or caveat. Private lenders focus on equity and a clear exit, so they can fund quickly and approve owners with bad credit, ATO debt or a bank decline, at a higher cost than a bank.
Key points
- Funded by individual investors, syndicates or private credit funds, not by deposits
- Almost always secured by real estate through a first mortgage, second mortgage or caveat
- The decision turns on equity and the exit plan more than credit score or financials
- Fast and flexible, with a cost to match, so best for short, well-defined needs
- Business or investment purposes only; ask exactly who funds the loan and what every fee is
- Typical amounts
- $20k to $5m (property-secured)
- Typical term
- 1 to 24 months
- Security
- First mortgage, second mortgage or caveat
- Assessed on
- Equity, exit and purpose
Picture three owners on the same Monday. One has a garnishee notice from the tax office. One has a commercial settlement due Friday and a bank that has gone quiet. One was declined last month because of a default from a business that closed years ago. All three own property with equity in it, and none of them can wait six weeks. That’s the territory where private business loans live.
Who are private lenders, and whose money is it?
A private lender is a business that lends money supplied by investors rather than by depositors. The investors might be a handful of individuals, a syndicate that funds one loan at a time, or a larger private credit fund with hundreds of investors. ASIC describes private credit as a rapidly expanding $200 billion market in Australia, and the RBA’s March 2026 review notes it has kept growing strongly while still forming under 2 per cent of financial system assets.
For borrowers, the size of the market matters less than the structure behind your particular loan. It affects how quickly the lender can say yes and how it behaves if you need more time:
- Balance-sheet lenders fund loans from their own capital or a standing fund, so a decision can come from one credit team in hours.
- Syndicated or contributory lenders find investors for each loan, which can add a step before funds are ready.
- Fund-backed lenders draw on a pooled fund whose own rules may limit how flexible it can be on extensions.
It’s a fair question to ask: “Whose money is this, and who decides if I need an extension?”
Banks are the right first stop for many businesses, and when you meet their criteria they are usually the cheapest lender available. Private lenders exist for the cases where you don’t, or where the timing simply doesn’t suit a bank’s process.
How private business loans are secured
Nearly every private business loan is backed by real estate. The form of security shapes speed and cost:
| Security | How it works | Speed | Typical use |
|---|---|---|---|
| First mortgage | Registered on an unencumbered property, or refinancing the existing first lender out | Days to a week or so | Larger amounts, longer private terms |
| Second mortgage | Registered behind your existing lender, often with its consent | About a week | Using equity without disturbing a good first loan |
| Caveat | Lender records an interest on the title using a caveat, without a registered mortgage | Can be within a day or two | Short, urgent amounts |
Residential, commercial, industrial, rural and vacant land can all be considered, though lenders discount harder-to-sell property. The caveat loans and second mortgage business loans pages explain each structure in detail, and the LVR calculator shows how much equity a lender is likely to count.
What do private lenders look at?
Their checklist is shorter than a bank’s, and the order of priority is different.
- Equity. The property’s value minus all existing debt. Most private lenders cap the combined loan-to-value ratio at a level that leaves a buffer if they ever had to sell.
- The exit. How the loan gets repaid at the end of the term: a sale, a refinance to a bank once the credit issue fades, a big contract payment, a tax refund. A clear, believable exit is the single biggest factor in approval.
- Purpose. Business or investment only. Expect to sign a declaration confirming this, and expect the lender to sense-check it against what you’ve told them.
- The property. Location, type, condition and how quickly it could sell.
- Your story. Credit history, ATO position and past declines are considered, but explained rather than scored.
Notice what’s missing: two years of tax returns, a minimum trading period, a credit score cut-off. That’s why private loans suit new ABNs, owners with late lodgements and businesses that have just been knocked back.
Not sure which form of security your property supports? Tell us about it here. It’s a short form and no credit enquiry is made when you send it.
What do private business loans cost?
They cost more than a bank loan, and more per month than most non-bank loans. The price reflects speed, flexibility and the risk of lending where others won’t. Typical cost items include:
- an establishment fee, usually charged when the loan settles
- interest, sometimes paid monthly, sometimes prepaid or capitalised (added to the balance)
- the lender’s legal costs and a valuation fee
- registration or caveat lodgement and later discharge costs
- in some contracts, an exit or discharge fee, and a higher default charge if repayments are missed
Because pricing is negotiated deal by deal, we never publish rates. The figure that matters is the total in dollars over the time you realistically expect to hold the loan. Get it in writing and test it in the bridging loan calculator or the loan cost comparison tool.
A worked example
A Perth hospitality group owes $210k to the ATO and has received a garnishee notice. The owners hold a house worth around $1.3m with a $640k first mortgage. Their bank declined a top-up because of the tax debt.
A private lender offers a $240k second mortgage over six months to clear the ATO balance plus costs. Combined debt is $880k, roughly 68 per cent of the house value. The exit is a refinance to a non-bank once the ATO debt is gone and the overdue BAS are lodged. Over six months the owners pay establishment, legal, valuation and interest costs that add up to a meaningful five-figure sum. They weigh that against the garnishee freezing their trading account and the director penalty risk, and decide it’s worth it, with a calendar reminder at month four to start the refinance.
When a private loan is the wrong tool
- The need is long-term, such as buying premises you’ll hold for ten years. A commercial property loan or bank facility suits better.
- There’s no property security at all. Look at unsecured business loans instead.
- The exit depends on hope rather than a dated event.
- The money is for personal use. Private business lenders won’t, and shouldn’t, fund it.
Questions to ask before you sign
- Who funds this loan, and who approves an extension if I need one?
- What is the total dollar cost if I repay on time, and if I need two more months?
- Is interest paid monthly, prepaid or capitalised?
- Is there an exit fee or a minimum interest period?
- What happens, step by step, if a repayment is late?
Ready to see what your property can unlock?
If you hold equity and have a business problem with a clear end date, a private loan may be the quickest sensible way through it. Two of our own lenders work in exactly this space: HomeSec Business Finance, which lends against residential, commercial and rural property, and EquityTap, which offers short-term property-secured facilities.
The easiest start is our enquiry form. Sixty seconds or so is all it takes, and sending it won’t leave a mark on your credit history. Nothing is broadcast to a crowd of lenders; one team reviews it. An experienced person reads the details and gives you a call to talk through what’s achievable. Give us the real numbers on the property, the debt and the deadline, and we can line up the right option without a second round of questions.
Frequently asked questions
What is a private lender in Australian business finance?
A lender that isn't a bank and funds loans with money from private investors, syndicates or private credit funds. Private lenders mostly lend against property for short business purposes and set their own credit rules, which lets them move quickly and consider borrowers that banks decline.
Do private lenders check credit?
Most will look at your credit file once you apply formally, but it rarely decides the outcome on its own. A past default, ATO debt or a recent bank decline is usually weighed against the equity in the property and how believable your repayment plan is.
How quickly can a private business loan settle?
Simple caveat-secured loans can sometimes fund within a day or two. Registered first or second mortgages take a little longer because of valuation, legal documents and registration, often around a week depending on the property and the paperwork.
Can I use a private loan to pay off my tax debt?
Yes. Clearing or reducing an ATO debt is one of the most common reasons owners use private lenders, because the money can arrive fast enough to deal with a garnishee notice or director penalty notice. It works best when you also have a plan to repay the private loan within its term.
Are private lenders regulated?
Lenders that lend for business purposes sit largely outside the National Credit Code that protects consumer borrowers, although general laws on misleading conduct and unfair contract terms still apply. That makes the loan documents, fees and default clauses especially important to read before signing.
What happens if I can't repay at the end of the term?
Talk to the lender well before the due date. Many will extend for a fee or allow a refinance to a longer-term lender. If neither happens and the loan defaults, the lender can enforce its security, which may mean selling the property.