What is a Private Loan?

A private loan is a short-term, real estate–secured loan funded by a non-bank lender. Unlike traditional banks, which rely heavily on income verification, credit scores and lengthy approval processes, private lenders approve loans based primarily on the strength of the security property, available equity and the business purpose of the funds.

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Private lending offers fast, flexible solutions for borrowers who need funding that banks cannot provide. These loans are commonly used by business owners, property investors and developers who require immediate access to capital for commercial or investment purposes. For a broader overview of private lending categories, visit the Private Lending Australia hub.

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Why Private Loans Exist

Traditional lenders have strict criteria, extensive documentation requirements and slow turnaround times. Private lenders fill the gap for borrowers who:

• require fast access to capital

• have incomplete or irregular financials

• need business-purpose funding

• are managing ATO or urgent expenses

• have impaired credit

• are purchasing, refinancing or developing property

Private lenders rely on commercial judgement rather than strict policy constraints.

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How Private Loans Are Assessed

Private lenders assess applications using four core criteria:

1. Security Property

Loans are secured by real estate such as:

• residential property

• commercial premises

• industrial assets

• mixed-use buildings

• land (case-by-case)

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2. Peak Debt and LVR

Private lenders calculate Loan-to-Value Ratio (LVR) based on peak debt, which includes:

• loan amount

• lender fees

• legal fees

• valuation fees

• broker fees (if applicable)

• capitalised interest

Learn more on the Loan-to-Value Ratio (LVR) page.

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3. Business or Investment Purpose

Private loans must be used for commercial or investment purposes. Common uses include:

• refinancing

• business cashflow

• property acquisition

• ATO and tax debt

• construction funding

• development funding

• renovation projects

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4. Exit Strategy

A clear exit strategy is required, often involving:

• sale of property

• refinance to a traditional lender

• business revenue

• settlement of another property

• completion and sale of a development project

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When You Should Consider a Private Loan

Borrowers typically use private lending when:

• timing is critical

• banks are too slow or decline the application

• financials are not updated

• credit issues prevent bank approval

• urgent settlement deadlines arise

• immediate capital is required for investment or business uses

• construction or development projects need short-term funding

Private loans are ideal for borrowers who have equity but limited documentation or time.

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Who Private Loans Are Designed For

Private lending suits:

• self-employed borrowers

• small business owners

• property investors

• developers

• borrowers with credit impairments

• borrowers needing urgent settlement

• clients seeking equity release via a Second Mortgage

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Typical Features of a Private Loan

Loan Terms

Terms generally range from 3 to 24 months, tailored for short-term commercial needs.

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Loan-to-Value Ratio

Private lenders generally lend between 60 percent and 75 percent of the property’s value, depending on the security and location.

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Repayment Structure

Borrowers may choose:

• monthly interest repayments, or

• capitalised interest (paid at the end of the term)

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Security

Private loans are secured by:

• a First Mortgage, or

• a Second Mortgage

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Speed of Settlement

Private loans can settle quickly:

• within 24 hours for urgent matters

• within 2 to 5 business days for standard scenarios

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Eligibility

Private lending is suitable for borrowers who:

• lack updated financials

• have irregular income

• have credit impairments

• require flexible, business-purpose lending

For tailored business lending solutions, see Short Term Business Loans or other specialised products listed in the Services section.

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Real Example of a Private Lending Scenario

A business owner in Wollongong required $140,000 to resolve an urgent ATO tax liability. Bank funding was unavailable due to incomplete financials. A private lender assessed the available equity, confirmed a realistic exit strategy and accepted a second mortgage position. The loan settled in 48 hours, allowing the business to continue operating without penalty.

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Quick Summary: Who Should Consider a Private Loan?

A private loan may be suitable if you:

• need fast access to capital

• require a short-term commercial funding solution

• have equity but limited documentation

• are under bank time pressure

• have been declined by a bank

• are purchasing, refinancing or developing property

• need to address short-term cashflow or ATO obligations

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FAQs

Is a private loan the same as a second mortgage?

No. A second mortgage is one specific type of private loan secured behind a first mortgage.

Do private lenders require financial statements?

Most private lenders do not require full financials or tax returns.

Can private loans be used for personal purposes?

No. Private loans must be used strictly for business or investment purposes.

How fast can a private loan settle?

Loans can settle within 24 hours in urgent cases. Standard settlements usually occur within 2 to 5 business days.