Asset-Based Private Lending in Australia: How It Works, When to Use It, and Why It’s Growing

Asset-based private lending has become one of the fastest-growing forms of non-bank finance in Australia. As banks tighten credit policy and slow approval timeframes, borrowers are increasingly turning to private lenders who assess loans based on asset value rather than traditional serviceability rules.

This guide explains what asset-based private lending is, how it works in Australia, when it’s commonly used, and why it has become a critical funding solution for investors, developers, and business owners.

What Is Asset-Based Private Lending?

Asset-based private lending is a form of finance where the primary lending decision is based on the value, quality, and marketability of the asset being offered as security, rather than the borrower’s income or credit profile.

In Australia, these loans are typically:

• Secured against real property

• Provided by non-bank or private lenders

• Short-term in nature

• Used for business or investment purposes

The focus is on:

• Loan-to-value ratio (LVR)

• Exit strategy

• Property type and location

• Market liquidity

How Asset-Based Private Lending Works in Australia

Unlike traditional bank loans, asset-based private lenders do not rely on automated credit scoring or rigid income verification models.

A typical assessment process includes:

1. Reviewing the security property

2. Confirming the loan purpose (business or investment)

3. Assessing the exit strategy (sale, refinance, stabilisation)

4. Structuring the loan around risk rather than serviceability

Because decisions are driven by the asset, approvals can often be issued within 24–48 hours, with settlements completed far faster than major banks.

Common Uses for Asset-Based Private Lending

Asset-based private lending is commonly used in scenarios where timing, structure, or complexity prevents traditional bank finance.

Typical use cases include:

• Short-term property acquisitions

• Bridging finance between sale and purchase

• Second mortgages and equity release

• Development or subdivision funding

• Business cash-flow support secured against property

• Refinancing distressed or non-conforming loans

These loans are particularly useful where a borrower is asset-rich but income-constrained, or where a transaction does not fit standard bank policy.

What Types of Assets Can Be Used as Security?

In Australia, asset-based private lending is most commonly secured against property, including:

• Residential property

• Commercial property

• Mixed-use assets

• Industrial property

• Development land

The stronger and more liquid the asset, the more flexible the loan structure and pricing can be.

Typical Loan Terms and Structures

While every private loan is structured differently, asset-based lending in Australia typically involves:

• Loan terms ranging from 3 to 24 months

• First or second mortgage security

• LVRs commonly up to 65% for first mortgages

• Higher combined LVRs where additional security is provided

• Interest rates reflecting risk, asset type, and duration

Because these loans are short-term and exit-driven, they are often used as a transitional funding solution, rather than permanent finance.

Why Asset-Based Private Lending Is Growing in Australia

Several factors have contributed to the rise of asset-based private lending:

• Slower bank approval timeframes

• Increased regulatory scrutiny on bank lending

• Growth in property-based investment strategies

• Demand for flexible, short-term capital

• A greater focus on execution speed in competitive markets

For many borrowers, private lending fills the gap between opportunity and bank funding.

Is Asset-Based Private Lending Regulated?

In Australia, asset-based private lending for business or investment purposes is generally NCCP-exempt, meaning it does not fall under consumer credit regulation.

However:

• Proper legal advice is required

• Independent valuations are commonly used

• Loans must be clearly documented as non-consumer in nature

Reputable private lenders focus heavily on transparency, exit strategy, and borrower understanding.

When Does Asset-Based Private Lending Make Sense?

Asset-based private lending is most suitable when:

• Speed is critical

• A transaction is short-term or transitional

• The asset is strong but income documentation is limited

• A borrower plans to refinance or sell in the near future

It is not intended as a long-term substitute for bank finance, but rather as a strategic funding tool.

Frequently Asked Questions About Asset-Based Private Lending

What is the difference between asset-based lending and bank lending?

Asset-based private lending focuses on the value and marketability of the security asset, whereas banks rely heavily on income, serviceability, and policy-based criteria.

Is asset-based private lending legal in Australia?

Yes. Asset-based private lending is legal in Australia when structured correctly, particularly for business or investment purposes.

Are asset-based private loans regulated?

Business-purpose private loans are generally NCCP-exempt, but they are still governed by contract law, disclosure requirements, and lender due-diligence standards.

How quickly can asset-based private loans be approved?

Indicative approvals can often be issued within 24–48 hours once property and scenario details are provided.

Who typically uses asset-based private lending?

Property investors, developers, and business owners who need short-term, flexible funding secured against real assets.

Final Thoughts

Asset-based private lending plays an increasingly important role in Australia’s finance landscape. By focusing on the asset rather than traditional lending constraints, private lenders provide flexible solutions for borrowers who need certainty, speed, and practical execution. Understanding how these loans work and when to use them allows borrowers to make informed decisions and capitalise on opportunities that might otherwise be lost.