Private Lending

So all the big banks have said no, and now all the second tier and specialist lenders are also struggling to meet your financing requirements. What to do now? Private Lending may be a viable solution. It is essentially borrowing money from a non traditional lender, in most instances, a wealthy private individual or company that has excess cash from their main area of business who is seeking to earn a higher return on their excess funds. It is important to note that private lending is primarily for business purposes as they are classified as unregulated loans that do not fall under the National Consumer Credit Protection Act.

Source a Solution with Private Lending

For what purpose can I use a private lender for?

The vast majority of the time, it needs to be for business purposes as almost all loans a private lender can offer you will not classified as “unregulated” National Consumer Credit Protection Act.

Business purpose can mean a range of activities including purchasing a commercial property, purchasing or starting a business, payout out a business debt, working capital for a business, any form of property development activities including construction financing and etc. However, the funds cannot be used to invest in a residential investment property or an owner occupied residential property.

Will I need to sign any declarations?


Most private lenders will require you to sign a declaration stating that the purpose of the fund is for business purposes.

What level LVR will private lenders go up to?

LVRs vary from asset to asset as well as lender to lender. Generally speaking, most private lenders will cap out at 65% LVR, meaning the absolutely maximum they would lend you is up to 70% of the value of an asset. For example, if your commercial property was worth $1M, some private lenders may lend you up to 70% of that, for a total of $700,000.

What fees are involved to use a private lender?

Private lenders charge essentially the same type of fees as a normal lender. This normally includes an application fee to get the process started; valuation fee for the asset that they are lending against once the loan is approved subject to valuation; legal fee for the lawyers to prepare loan documents once the valuation satisfies the lender’s requirements; and an establishment fee once the loan is drawn.