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Private lending in Australia: A complete guide to flexible non bank finance
- Innovate Funding
- Nov 8, 2023
- 5 min read
Updated: Nov 14
Private lending in Australia has become one of the fastest growing alternatives to traditional bank finance. As more businesses and individuals seek faster approvals, flexible lending criteria, and tailored funding solutions, non bank lenders are filling a crucial gap in the modern lending market. This guide explains what private lending is, how it works, the benefits and risks, and how Innovate Funding helps borrowers access the right solution for their financial needs.
Understanding private lending in Australia
Private lending involves individuals, private investors, or non bank financial institutions providing loans outside the traditional banking system. Instead of relying heavily on credit scores and strict underwriting rules, private lenders focus on asset value, equity, and the overall strength of the scenario.
This asset based approach makes private lending accessible for:
borrowers with imperfect credit
individuals needing fast alternative finance
Private lending has grown rapidly because it offers speed, flexibility, and practical lending solutions that traditional banks cannot always match.
The benefits of private lending
Private lending in Australia offers a range of advantages, especially for borrowers who need fast outcomes or do not meet traditional banking criteria.
Fast approval and funding
Private lenders operate with streamlined processes, minimal red tape, and practical risk assessment. This often allows approvals within days and funds to be released quickly for urgent or time sensitive projects.
Flexible loan terms
Private lending provides far greater flexibility in structuring loans, including interest only options, customised repayment schedules, and tailored terms that suit the borrower’s goals.
Accessible for borrowers with poor credit
Private lenders place more weight on equity, security, and exit strategy. This allows borrowers with damaged or limited credit history to access funding that would otherwise be unavailable through traditional lenders.
Wide range of loan types
Private lending covers a broad selection of loan products, including:
This diversity makes private lending suitable for many financial situations.
How Innovate Funding helps borrowers access private lending in Australia
Innovate Funding connects borrowers with reputable non bank lenders across Australia. Our team works to simplify the lending process and secure funding that aligns with each borrower’s goals.
Access to an extensive lender network
We have strong relationships with a variety of trusted private lenders. This allows borrowers to access competitive rates and tailored loan structures across multiple funding options.
Personalised loan matching
Innovate Funding assesses each borrower’s situation to match them with the most suitable lenders. This personalised approach removes the stress of searching for lenders independently.
Streamlined application process
Borrowers complete a simple online application, and our team manages the rest. This ensures a smooth experience from initial enquiry through to settlement.
Expert guidance through the entire process
Innovate Funding provides professional support from start to finish. Our team explains loan terms, negotiates lender conditions, and ensures borrowers receive a transparent and well structured solution.
Types of private lenders in Australia
Private lending comes from several types of non bank lenders:
Individual private lenders
These lenders use personal capital to provide loans. They often take a personalised approach and may offer additional flexibility.
Private lending companies
These organisations pool investor funds to provide structured private loans for property, business, and other financial needs.
Peer to peer lenders
P2P lending platforms allow individuals to lend directly to borrowers through online systems, usually at competitive rates.
Crowdfunding platforms
Borrowers can raise funds from a group of investors online, often for development, business, or real estate projects.
Private lending vs traditional lending
Understanding the differences can help borrowers choose the right option.
Approval process
Banks require strict documentation and lengthy assessments. Private lenders focus more on security, equity, and exit strategy which leads to faster approvals.
Credit requirements
Banks prioritise credit scores. Private lending focuses on the asset, allowing borrowers with imperfect credit to still obtain finance.
Loan terms
Bank loan terms are more rigid. Private loans are more flexible and can be customised to the borrower’s situation.
Speed of funding
Banks can take weeks or months to approve a loan. Private lenders commonly settle within days.
Pros and cons of private lending in Australia
Understanding both sides helps borrowers make informed decisions.
Pros
fast approvals
flexible loan terms
accessible for borrowers with poor credit
diverse loan products
personalised support
Cons
higher interest rates than banks
limited regulatory protection
depends heavily on collateral
limited products in some regions
How to qualify for private lending
Requirements vary, but most private lenders review:
Collateral
Real estate or valuable assets are typically required to secure the loan.
Loan to value ratio
Lower LVRs are preferred. Higher LVRs may come with higher rates or additional security.
Repayment ability
Lenders review income, cash flow, and overall financial position.
Exit strategy
For example selling a property, refinancing, or business cash flow. A clear exit strategy increases approval likelihood.
Risks and considerations
Before choosing private lending in Australia, borrowers should understand:
Higher interest rates
Rates reflect increased flexibility and risk.
Security requirements
Borrowers need to be prepared to offer collateral.
Less regulatory oversight
Private loans require careful review of terms and legal advice.
Exit strategy limitations
Borrowers must be certain they can execute their repayment plan.
Real estate investor
A property investor secured private lending to purchase and renovate a distressed property that banks refused due to a previous credit issue. With fast funding, the investor completed the project and sold for a strong profit.
Small business expansion
A business owner needed urgent working capital to expand operations. Private lending provided fast approval based on cash flow potential rather than strict credit requirements, allowing the business to grow profitably.
Choosing the right private lender
Borrowers should consider:
lender reputation
loan terms and interest rates
customer service
industry experience
A reputable non bank lender with experience in the relevant loan type provides the best chance of a successful outcome.
Private lending regulations and compliance
While private lending is flexible, lenders must still follow Australian credit laws. Borrowers should understand their obligations and seek advice if unsure about any terms.
Conclusion
Private lending in Australia offers fast, flexible and accessible funding that traditional lenders often cannot provide. With tailored solutions, faster approvals, and practical lending criteria, private lending empowers individuals and businesses to access the capital they need when they need it. Innovate Funding is committed to helping borrowers find the best private lending options for their financial goals through expert guidance and a trusted, extensive network of non bank lenders.
FAQ Section
What is private lending in Australia?
Private lending is funding provided by non bank lenders who focus on equity and asset value rather than strict credit scores.
Is private lending legal?
Yes. Private lenders operate under Australian credit laws and must comply with ASIC regulations.
How fast is private lending approval?
Many private lenders approve loans within 24 to 72 hours depending on the scenario.
What can private lending be used for?
Common uses include business expansion, property purchases, development, refinancing, and bridging loans.
