Private business loans

What makes a lender “private”?

A private lender is any business lender that isn’t a bank. Some are large, well-established non-bank lenders; others are funds that pool money from private investors; some are smaller specialist outfits. What they share is freedom from bank-style lending policy. They can set their own rules about what they’ll accept.

That freedom is what makes private business loans useful. A bank’s credit policy is designed for the typical borrower. If your situation is untypical — a recent tax debt, a business restructure, a credit default from a bad year, tax returns not yet lodged — you can fall outside the box no matter how solid the underlying deal is.

What do private lenders focus on?

Instead of starting with your credit score and two years of financials, private lenders tend to start here:

Focus	What they ask
Security	What property is on offer, what’s it worth, what’s already owed on it?
Purpose	What’s the money for, and is it a business purpose?
Exit	How and when will they be repaid?
Character	Is the story consistent and the borrower upfront about issues?

Credit history still matters, but it’s one input rather than the gatekeeper. Being upfront about problems helps: private lenders deal with difficult situations every day, and it’s surprises that worry them, not history.

Who are private business loans for?

• Owners whose bank has declined them, or whose bank is taking too long. If that’s you, our guide on what to do after a bank says no is a good place to start.
• Businesses with an ATO debt that needs clearing.
• Borrowers with bad credit or a recent default.
• Self-employed owners with low documentation.
• Deals with unusual timing, like bridging between two settlements.

How are private loans usually structured?

Most private business loans are secured by property in one of three ways: a first mortgage, a second mortgage or a caveat. Terms are often shorter than bank loans, from a few months to a few years, and some lenders allow interest to be prepaid or capitalised so there are no monthly repayments during the term.

Because terms can be short, the plan to refinance out of a private loan deserves thought from day one. A good private loan is one that solves today’s problem and leaves you in a better position to move to cheaper, longer finance later.

What should I check before signing?

• Total cost in dollars — fees, interest over the full term, legal and valuation costs.
• Default terms — what happens if a payment is missed or the exit is late.
• Extension terms — whether the term can be extended and how that’s priced.
• Early repayment — whether you can repay early without heavy penalties.

If anything in the documents looks unfair or unclear, ask your solicitor or accountant. Small businesses have protection against unfair contract terms under Australian law.

Want to see where private lending sits against other options? Run your situation through the loan matcher, or go straight to a 60-second enquiry.

What else is private business loans called?

Lenders, accountants and search engines don’t all use the same words. You’ll also see this entry described as Private lending, Non-bank business loan and Private mortgage. In our A–Z index every one of those names points back to this page, so whichever term you searched, you’ve landed on the same thing. If a lender uses a name you don’t recognise, ask them to describe how the security, the term and the repayments work; that tells you far more than the label.

Where does it sit in the directory?

This entry lives on the property-secured shelf. It’s most often used for cash flow and working capital, tax bills and debts, buying, starting or growing a business, property and projects, and the security usually involved is residential or commercial property. It is one of the quicker entries to put in place when the paperwork is ready. Its closest neighbours are:

• First mortgage business loans — The lender holds first place on title — usually the largest amounts and longest terms.
• Second mortgage business loans — Borrow against equity sitting behind your existing home loan without refinancing it.
• Caveat loans — Short-term money secured by a caveat lodged on the title instead of a full mortgage.
• Using your home to secure a business loan — How residential security works for business borrowing, and what to weigh up first.

To compare all of them at once, filter the Loan Finder by purpose and security.

Common mistakes to avoid

• Guessing the property value. Use a recent appraisal or comparable sales rather than the figure you’d like it to be; an inflated estimate only creates a gap later.
• Forgetting what’s already on the title. Every existing mortgage, caveat or private loan affects how much room is left, so list them all upfront.
• Leaving the exit vague. With property-backed lending, the plan for repayment carries as much weight as the security itself. Write it down in two sentences.
• Not involving co-owners early. Everyone on the title will need to sign, and a late surprise can stall settlement for weeks.
• Borrowing the bare minimum. Fees, adjustments and small overruns add up; a modest margin is far cheaper than a second loan.

What should I ask before signing up for private business loans?

A short list of questions saves a lot of regret. Put these to any lender or specialist before you commit:

1. What is the total repayable, in dollars? Ask for one figure covering interest over the full term plus establishment, legal, valuation and any line or discharge fees.
2. How is the property value being assessed? Some lenders order a formal valuation, others rely on desktop data or agent evidence. Knowing which helps you plan timing.
3. What happens if my exit takes longer? Get extension terms in writing before you sign, including any default or holding charges.
4. Can interest be prepaid or capitalised? For short terms this can protect cash flow, but it changes what’s owed at the end.
5. Who needs to sign? Confirm early whether every owner, director and spouse on title must sign or seek independent advice.

If an answer is vague, ask again or ask for it in writing. Good lenders are happy to explain their terms clearly.

Ready for a lender that reads the whole story?

If your deal is sound but doesn’t fit a bank’s checklist, private lending could be the answer. The first step is a short enquiry with no credit check attached. It reaches one specialist, not a long line of lenders, and that person calls you to understand the situation properly.

Please give us the full picture, including the awkward parts. Accurate information means we can find the right lender first time rather than after three false starts. Start your enquiry.