Quick answer
A private business loan is finance from a non-bank lender, usually funded by private capital and secured by residential or commercial property. Private lenders focus on the security and the exit plan rather than years of financials, so they can help businesses banks decline, including those with bad credit or ATO debt. Loans run from $20k to $5m, are usually short to medium term, and are for business purposes only.
Key points
- Private lenders are non-banks that lend their own or investors' money, usually against property.
- They decide on the property, the purpose and the exit, not on a stack of past tax returns.
- Terms are typically shorter than bank loans, so the repayment plan matters from day one.
- They often help where a bank has said no or simply can't move in time.
- Loan size
- $20k – $5m
- Lender type
- Non-bank private lender
- Assessed on
- Security, purpose and exit
- Use
- Business purposes only
Private business loans come from non-bank lenders who use private capital rather than deposits, and most of them lend against property. They exist because a lot of perfectly sound businesses don’t fit a bank’s checklist: the accounts are a year behind, the credit file has a scar on it, there’s tax debt, or the opportunity simply won’t wait for a credit committee.
The question this page answers is the one most owners are really asking: when should a business go private instead of to a bank, and what am I signing up for if I do?
What makes a lender “private”?
A private lender is a business whose job is lending, but it isn’t an authorised deposit-taking institution. Its money comes from the lender’s own funds, wholesale investors or a pooled fund. That changes how it thinks about risk.
A bank asks: does this business fit our policy? A private lender asks: is this a sensible loan, secured properly, with a clear way out? The government’s business.gov.au funding guide makes the same distinction in plainer words, noting that non-bank lenders may have “more flexible loan criteria” than banks, along with higher costs.
In practice, most private business lending is secured by real property through a first mortgage, a second mortgage or a caveat. The secured business loans page explains those positions in detail. This page is about the lender and how it decides.
Bank or private lender: how do they compare?
| Major bank | Private lender | |
|---|---|---|
| Main question | Does the business meet policy? | Is the security sound and the exit clear? |
| Financials needed | Usually two years of tax returns and accounts | Often bank statements, a purpose and an exit plan |
| Credit history | Heavily weighted | Considered, but not decisive with strong security |
| ATO debt | Often a deal-breaker | Considered case by case |
| Loan term | Long term | Short to medium term |
| Cost | Lower | Higher, reflecting risk and flexibility |
| Decision process | Policy-driven, multiple sign-offs | Smaller credit team, case-by-case judgement |
Neither column is “better”. A bank is the cheaper long-term home for debt; a private lender is the tool for getting something done that a bank won’t do, or won’t do in time.
When is a private business loan the right tool?
Private finance earns its cost in situations like these:
- The bank said no because of trading history, a recent loss, a credit default or a policy quirk.
- There’s ATO debt and the business would rather clear it than carry it. With general interest charges incurred from 1 July 2025 no longer deductible, many owners now compare a payment plan with refinancing more carefully.
- An opportunity has a deadline, such as buying out a supplier’s stock, a competitor’s business or a partner’s share.
- The accounts aren’t lodged yet, so a bank can’t assess the latest year even though trading is fine.
- A bridge is needed until a property sells or a contract pays. See bridging loans for that specific case.
If any of those sound familiar, tell us what’s going on and we’ll look at whether private lending fits.
How do private lenders assess a deal?
Expect the conversation to cover five things:
- Security. What property is offered, who owns it, what it’s roughly worth and what’s already owed on it.
- Purpose. What the money is for, with quotes, contracts or an ATO statement where relevant.
- Exit. How the loan will be repaid, and when. This is the single most important answer you’ll give.
- The story. Why a bank isn’t the answer right now. Honest explanations of past credit problems go a long way.
- The people. Directors’ backgrounds, the industry and how long the business has traded.
Private lenders may also take a general security agreement over the business’s assets, registered on the PPSR. The PPSR notes that a security interest “is not an ownership interest”, so day-to-day trading carries on as normal.
What does a private business loan cost, and how is it structured?
Private loans are priced deal by deal. The security, the loan amount, its position on title, the term and the borrower’s circumstances all feed into the number, which is why responsible lenders don’t advertise one.
Common features you’ll see in the private market:
- Interest options. Pay monthly, prepay interest for a set period, or capitalise it into the loan so nothing is due until the end.
- Establishment fee when the loan is set up.
- Legal costs for loan documents and registering security.
- Shorter terms, with a clear end date that ties back to your exit.
- Early repayment terms that vary between lenders, so ask before you sign.
The cheapest private loan is the one you repay on time from a realistic exit. Rolling one expensive short-term loan into another is where costs get out of hand.
Illustrative example
Illustrative example: A family-owned engineering workshop has a strong order book but posted a loss two years ago after losing a major customer. Its bank won’t extend the overdraft. The business also has $90k of overdue BAS. The owners need $250k to clear the tax debt and buy materials for a large fabrication contract. They own an investment unit with no loan on it. A private lender takes a first mortgage over the unit, the tax debt is paid in full, and the plan is to refinance back to a bank once the next year’s accounts show the recovery. The bank’s “no” was about history; the private lender’s “yes” was about security and a believable exit.
Common mistakes with private business loans
- No exit plan. “We’ll refinance later” isn’t a plan unless you know what a bank will need to see.
- Borrowing the maximum. Take what the purpose needs; extra money costs extra interest.
- Hiding problems. Undisclosed tax debt or defaults surface on searches and slow everything down.
- Ignoring the term. A twelve-month loan for a three-year problem sets up a stressful renewal.
For industry-specific angles, the industry finder shows what lenders focus on in your sector.
Is private lending the way through for your business?
When a bank can’t help, private lending is often how a sound business with property behind it gets moving again. Finding out where you stand is easy. The enquiry takes around a minute and there’s no credit check at that stage. We don’t auction your details to a list of lenders, so your phone stays quiet. A real person looks at your security, purpose and exit, then calls you to talk it through. Please be accurate about what you own, what you owe and why you need the money; that’s what lets us match the right private lender first time.
Frequently asked questions
Is a private business loan the same as a loan from a friend or family member?
No. In lending, a private loan means finance from a professional non-bank lender that uses private capital. It comes with formal loan documents and registered security, just like a bank loan, but with a different approach to assessment.
Why would a private lender approve a loan my bank declined?
Banks work to strict policy that weighs trading history, serviceability calculations and credit scores heavily. A private lender looks harder at the property security and whether there is a credible plan to repay, so a business that falls outside bank policy can still make sense to them.
How long are private business loans?
They are typically short to medium term, often months rather than decades. The idea is to solve a specific problem or fund a specific opportunity, then repay from cash flow, an asset sale or a refinance to cheaper finance later.
Are private business loans more expensive than bank loans?
Usually, yes, because the lender is taking on deals a bank won't and is often moving faster. Pricing is set on each borrower's circumstances, including the security, the amount, the loan's position on title and the term, so there's no single figure that applies to everyone.
Can I get a private business loan with ATO debt?
ATO debt is considered case by case. Plenty of private loans are used to clear tax debt in one go. Tell us the size of the debt and whether there's a payment plan in place so we can match the right lender.
Do private lenders still check my credit?
Most do, once you decide to proceed. But a past default or a low score carries less weight when there's good property security and a clear exit. There's no credit check when you first enquire with us.