Private business loans, decided fast and funded fast

Banks are built for the borrower who fits the box. Cash-flow lenders are built for small, quick amounts. A lot of good Australian businesses sit in the gap between the two: they need real money, they need it quickly, and they own property that more than covers it. That’s where private business lending comes in.

How private business lending works

A private business loan is secured by property: your home, an investment property, a commercial building or land. Because the loan is backed by real security, the lender can focus on three questions:

• Is there enough equity? What the property is worth against what’s already owed on it.
• What’s the money for? A clear business purpose.
• How does it get repaid? A sale, a refinance to a bank, a big contract paying out, or the business’s own cash flow.

Get those three right and the decision can be made in hours, not weeks. Approval can come within the hour, and funds can be in your account in as little as 24 hours.

Why owners choose a private lender

Speed. No credit committee meeting next Thursday. No valuation to wait for. A lending manager calls you, usually within 30 minutes in business hours.

Bigger amounts. From $20k to $5 million, based on your equity rather than a multiple of your monthly turnover.

Flexibility on credit. Past defaults, a messy year or an ATO debt don’t automatically rule you out. The security does the heavy lifting.

Room to breathe. Up to 6 months with no repayments, with the interest added to the loan, so the money goes to work in the business straight away.

No lock-in. Repay early whenever you like, or extend if the bank refinance is running late, without penalties.

Common reasons for a private business loan

• Clearing an ATO debt or payment plan
• Funding a large contract, stock order or equipment purchase
• Settling on a commercial property or business purchase before bank finance is ready
• Buying out a business partner
• Paying out several expensive cash-flow loans with one loan
• Covering a short-term cash crunch while a big invoice is paid

First mortgage, second mortgage or caveat

Private business loans are secured in one of three ways, depending on what’s already owing on the property and which state it’s in:

• First mortgage: the property has no loan on it, or the private loan pays out the existing one.
• Second mortgage: your bank loan stays in place and the private loan sits behind it.
• Caveat: a fast way to secure the loan in most states, which can later be converted to a registered second mortgage.

Planning your exit

Every good private loan starts with the end in mind. Before you enquire, think about how the loan will be repaid: a refinance to a bank once your financials are lodged, the sale of a property, or a contract that pays out in a few months. Our page on loan purpose and exit plans shows you how to write it down in a few lines.

What private lenders look for

Every lender has its own way of working, but a strong private loan application usually has the same ingredients:

• Clear equity. The combined borrowing, including any existing mortgage, sits comfortably inside the property’s value.
• A real business purpose. Private business loans are for business purposes only, such as tax, stock, equipment, a contract, a purchase or a refinance.
• A believable exit. You can explain how the loan will be repaid within its term, and what the back-up plan is if that takes longer.
• Honest answers. Telling your lending manager about past credit issues, an ATO debt or a co-owner up front saves time. Surprises late in the process are what slow deals down.

How private lending compares

	Bank	Cash flow lender	Private property-secured lender
Decision based on	Policy and credit scoring	Bank statements	Equity, purpose and exit
Typical speed	Weeks	Hours to days	Approval within the hour possible
Amounts	Large, slowly	Small, capped by turnover	$20k to $5 million
Credit issues	Often declined	Often declined	Considered case by case
Repayments	From month one	Daily or weekly	None for up to 6 months

Ready to see what’s possible?

It takes about 60 seconds to send an enquiry, and there’s no credit check to enquire. A lending manager will usually call within 30 minutes during business hours with an indicative answer.

Is private lending right for you?

It’s a good fit when the value is in your property, the need is short-term and time matters. It’s not designed for long-term debt you never plan to repay. If you can wait several weeks and you tick every box for a bank, a bank loan may suit you better, and your lending manager will tell you so.