Non-Bank Lenders in Australia: What They Are & Why They Matter

Non-bank lenders in Australia have become an increasingly important part of the finance landscape — especially for property investors, developers and business owners who need fast, flexible funding that traditional banks can’t always deliver.

As explained in our guide to private lending in Australia, non-bank finance has grown significantly as borrowers look for certainty of execution rather than rigid bank policy.

In this article, we explain:

• What non-bank lenders are

• How they differ from banks

• When borrowers use them

• The risks and benefits involved

What Are Non-Bank Lenders?

A non-bank lender is a financial institution that offers loans without holding a traditional banking licence. These lenders are commonly involved in asset-backed private lending, where decisions are based on property value and exit strategy rather than income alone.

Many non-bank lenders operate in the private lending space, offering alternatives to traditional finance where speed, flexibility or complexity is involved.

Learn more about how this works in our overview of private lending solutions.

How Non-Bank Lenders Differ from Banks

Banks rely heavily on serviceability models, credit scoring and strict policy. Non-bank lenders assess loans based on risk, asset quality and exit strategy.

This difference becomes clear in scenarios involving second mortgages, bridging loans or short-term funding structures that banks often decline.

Feature	Banks	Non-Bank Lenders
Approval Speed	Weeks	Days
Criteria	Income-focused	Asset-focused
Flexibility	Limited	High
Loan Types	Standard mortgages	Short-term & specialist

When Do Borrowers Use Non-Bank Lenders?

Non-bank lenders are typically used when banks are slow, restrictive or unable to approve a loan in time.

1. Auction & Short Settlement Purchases

Non-bank finance is commonly used for auction purchases or tight settlement deadlines where banks cannot meet timeframes. This is especially relevant for investors and buyers agents using short-term business loans or bridging facilities.

2. Bridging Finance

Bridging loans allow borrowers to purchase property while awaiting the sale or refinance of another asset. Learn more about how bridging finance works in property transactions.

3. Development & DA-Stage Funding

Early-stage developments often require funding before bank conditions are met. In these cases, borrowers may use private development loans to move a project forward.

4. Equity Release & Second Mortgages

Borrowers frequently use second mortgage finance to unlock equity without refinancing existing senior debt.

Advantages of Non-Bank Lending in Australia

Speed

Indicative approvals can often be issued within 24–48 hours, particularly for asset-backed transactions.

Flexibility

Non-bank lenders assess deals on merit, which allows funding for scenarios that fall outside bank policy.

Tailored Loan Structures

Loan structures can be customised for:

• First mortgage private lending

• Second mortgages

• Bridging finance

• Development funding

What Types of Loans Do Non-Bank Lenders Offer?

Non-bank lenders in Australia commonly provide:

• First mortgages

• Second mortgages

• Bridging loans

• Development and construction funding

• Secured business loans

• Equity release facilities

These loans are typically short to medium term and designed to transition borrowers back to bank finance where appropriate.

Risks & Considerations

While non-bank lending offers flexibility, it is important to understand:

• Interest rates may be higher than bank loans

• Loan terms are usually short-term

• A clear exit strategy is essential

Professional advice is always recommended when structuring private finance.

How to Choose the Right Non-Bank Lender

When selecting a non-bank lender, consider:

• Track record and experience

• Transparency of terms

• Speed of execution

• Ability to structure solutions across multiple assets

Working with an experienced private lender or adviser helps ensure the loan aligns with your broader strategy.

Frequently Asked Questions About Non-Bank Lenders

Are non-bank lenders legal in Australia?

Yes. Business and investment lending is commonly NCCP-exempt, provided the loan is structured correctly.

Can non-bank lenders fund auctions?

Yes. Non-bank lenders are often used for auction purchases and tight settlement transactions.

Do non-bank lenders require property security?

Most non-bank loans are secured against residential, commercial or mixed-use property.

How fast can non-bank lenders approve loans?

Indicative terms can often be issued within 24–48 hours, subject to information provided.

Final Thoughts

Non-bank lenders play a critical role in Australia’s finance ecosystem. By focusing on assets rather than rigid policy, they provide solutions that enable investors, developers and business owners to act quickly when opportunities arise.

Non-bank lending is not a replacement for banks — it is a strategic tool used alongside traditional finance.