Private lending is funding from non-bank and private credit funds, rather than from the major banks. The category covers everything from short-term bridging through to multi-year senior debt, with rates that run several percentage points above mainstream lending and approval timelines that move much faster. This article covers what private lending actually is from a borrower perspective, when it fits, and how to compare across an opaque market. For the broader category and adjacent products, see bridging and private finance.
What "private" actually means here
In Australian commercial lending, "private" is shorthand for any lender that is not one of the major banks (CBA, NAB, ANZ, Westpac) or their direct non-bank competitors with broad retail presence. It includes:
Non-bank lenders. Companies that lend their own money or money from securitised wholesale funding. Many are well-established, well-capitalised, and regulated to a similar standard as banks. The "non-bank" label is often misleading.
Private credit funds. Investment funds that pool capital from investors and lend it to businesses. The fund earns the spread between investor returns and loan rates. This is the fastest-growing part of Australian commercial lending.
High-net-worth or family-office direct lenders. Wealthy individuals or families lending directly through formal structures. Smaller in aggregate but flexible on individual deals.
When private lending makes sense
Three recurring patterns:
Speed. A mainstream bank takes 4 to 12 weeks for a commercial deal. Private credit can settle in 1 to 3 weeks for the right deal. When a transaction has a hard deadline, the speed often justifies the rate premium.
Non-conforming situations. Banks have rigid policy. Private lenders take a case-by-case commercial view. A profitable business that does not fit a bank policy box (recent restructure, asset class outside bank appetite, complex group structure) often gets a yes from private credit where banks said no.
Specialist sectors. Some property types, industries, and structures (development, distressed, mezzanine, structured trade) are mostly funded by private credit because banks pulled back from those segments post-2018.
When private lending is the wrong answer
A vanilla commercial property purchase with strong financials should usually go to a major bank or strong non-bank. Paying the private credit premium for a deal a bank would happily fund is just paying more.
A loss-making business looking for a turnaround line of credit. Private credit will not magic the underlying issue; it will just compound it at a higher rate.
A short-term need with no clear exit. Same brokerage discipline as bridging finance: if the exit does not stack up, the loan does not stack up.
What private lending typically costs
Private lending rates run 2 to 6 percentage points above bank pricing for equivalent risk, with the gap widening as you move from senior secured into junior or mezzanine positions. Typical patterns for early 2026:
Senior secured property loans, well-located commercial: 8 to 11 per cent per annum.
Development finance, senior position: 9 to 13 per cent.
Mezzanine debt (subordinated): 13 to 20 per cent.
Short-term bridging (3 to 12 months): 10 to 18 per cent.
Caveat loans (1 to 6 months, speed-priority): 14 to 24 per cent.
Plus establishment fees (typically 1 to 3 per cent) and exit fees on some structures. The true all-in cost is what matters, not the headline rate.
How to compare across the private market
The private lending market is opaque. There is no equivalent of the home-loan comparison sites; rates and structures vary deal-by-deal; and lender appetite shifts month by month based on their own funding cycle. A few things make the comparison tractable:
Compare apples to apples. Term, security position, exit terms, fee structure, and rate all need to be normalised. A 10 per cent loan with 3 per cent establishment fee and an exit fee can be more expensive than a 12 per cent loan with no fees, depending on the term.
Get multiple term sheets. The biggest pricing range we see on commercial deals is between different private lenders for the same deal, not between private and bank. Going to one private lender alone leaves a lot of value on the table.
Understand the lender funding cycle. Some private credit funds are flush with capital and pricing aggressively; others are at capacity and quoting wide. The lender most active for your deal type this month may not be the same one as six months ago.
The role of a broker in private lending
Private lending is exactly where independent brokerage adds most value. Three reasons:
Lender access. Many private credit funds do not actively market to direct borrowers and only take deals through established broker relationships.
Comparison. Getting 3 to 5 private lenders to quote on the same deal is impractical for a borrower to do directly; it is daily work for a specialist broker.
Honest filtering. Private lending has more capacity to harm a borrower in the wrong situation than mainstream lending does. A good broker says no when private lending is wrong, not just when it is unavailable.
Where to from here
We arrange private lending and short-term finance across a panel of specialist non-bank and private credit lenders. You pay us nothing; the lender pays us a commission when the loan settles. We will tell you when private lending is genuinely the right call and when a bank product would suit better. Book a 20-minute brief to talk through your situation.
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