How to Become a Private Lender in Australia
Learning how to become a private lender in Australia starts with the line between business-purpose credit and consumer credit. Credit provided wholly and exclusively for business and investment purposes is not regulated under the National Consumer Credit Protection Act 2009 (the NCCP Act). ASIC publishes official guidance on credit licensing, and business.gov.au covers business structures and registrations.
If you are a business owner looking at the borrowing side, you can see if you qualify. Eligibility depends on the lender’s assessment.
Key takeaways
- HomeSec provides credit wholly and exclusively for business and investment purposes, and that credit sits outside the NCCP Act.
- The one thing that must be present in every HomeSec loan is a business purpose.
- Real-estate security is central: residential, commercial, rural or vacant land, held as a first or second-ranking mortgage.
- HomeSec prices each scenario individually against the loan amount and the security.
- Official guidance on licensing, structures and tax comes from ASIC, business.gov.au and the ATO.
How does private business lending work, step by step?
At HomeSec, a scenario moves through three stages, from a first conversation to funds being released.
- Tell us the deal. The borrower outlines the amount, purpose, timing, property and how the loan will be repaid, and a Lending Manager usually gives an indicative answer on that call in minutes.
- Conditional approval. The documents are photo ID, a rates notice and the most recent mortgage statement, and gathering them takes about fifteen minutes.
- Funds released. Funds can be released in as little as 24 hours from a clean, complete scenario, paid to the borrower’s account or straight to the ATO.
Each stage depends on the lender’s assessment, and moving to the next one is never automatic.
What does private lending mean in a business-finance context?
In this guide, private lending means credit secured against real estate and provided for business or investment purposes, with HomeSec’s model as the example.
HomeSec provides credit wholly and exclusively for business and investment purposes. Whatever the size or shape of the deal, a business purpose is the one element that must be present. A borrower might want working capital, money to settle a commercial property purchase, or funds for an investment. In each case the use of funds is tied to a business or investment activity.
Private lenders differ widely in what they accept and how they assess a deal. For a wider look at that question, see our overview of private lenders in Australia.
Moneysmart, run by ASIC, has general background on borrowing. The Australian Government’s business.gov.au has a finance and funding section that explains common options for business owners. Neither resource is specific to any one lender, which makes them a useful neutral starting point.
Where is the regulatory line for business-purpose credit?
The line is drawn by purpose. Credit provided wholly and exclusively for business and investment purposes is not regulated under the NCCP Act. The protections available to consumer borrowers do not apply to that credit.
Property purchases show where the line falls in practice:
| Scenario | HomeSec’s position | Reason |
|---|---|---|
| Buying a commercial property in a personal or company name | Can fund | Business or investment purpose |
| Buying a residential property in a company name | Can fund | Business or investment purpose |
| Buying a residential property in a personal name | Cannot fund | Regulated consumer credit under the NCCP Act |
| Money for personal or domestic purposes | Not a fit | Outside HomeSec’s business-only scope |
This guide does not say what licence a new lender needs, or whether one is required in a given situation. ASIC’s credit regulatory resources are the official place to read about credit licensing.
What are the core building blocks of a secured private lending model?
A secured model rests on property, loan size, term and repayment structure, with pricing set for each scenario.
Security. HomeSec accepts residential, commercial, rural or vacant land as security, held as a first or second-ranking mortgage. Several properties can secure one loan through cross-collateralisation, and the borrower’s home can be the security.
Loan-to-value ratio (LVR). HomeSec lends up to 80% LVR on residential security and up to 70% on commercial security. LVRs are lower on large acreage and may reduce on properties worth less than $800,000.
Loan size. HomeSec’s loan amounts run from $20,000 to $5,000,000.
Term and repayments. The term is open, starting from one month, with no set minimum or maximum. Repayments are interest-only, or interest can be capitalised for up to 6 months.
Pricing. The interest rate is set per scenario, priced against the loan amount and the security. As general economic context only, the Reserve Bank of Australia publishes the cash rate.
How does a security-focused lender assess a scenario?
A security-focused lender looks first at the property and at how the loan will be repaid.
For an indicative answer, HomeSec asks for seven details:
- the property’s rough value (the borrower’s own estimate is fine)
- its address
- what is owing on it and to whom
- how much to borrow
- for how long
- how many people are on the title
- what the money is for
The exit, meaning how the loan gets repaid, is part of the very first conversation.
HomeSec does not require cashflow records, a sworn valuation, financial records, a minimum trading period or a serviceability test. Credit history is considered but is never disqualifying on its own, so defaults, arrears and thin files do not rule a borrower out.
A scenario is not a fit when there is no real-estate security, when the loan would sit third behind two existing mortgages, or when the money is for personal or domestic purposes. For more detail, see what private lenders in Australia actually require. Every application remains subject to lending criteria and the lender’s assessment.
How does one private lender structure repayments?
HomeSec’s structure centres on flexibility over the life of the loan. These points describe HomeSec’s own model only.
With capitalised interest of up to 6 months, there can be nothing to pay for the first 6 months. HomeSec does not use daily or weekly direct debits.
The borrower chooses the term, can extend it, and can repay early. If a loan is repaid early, unused months of capitalised interest are rebated. Once outside the capitalised-interest period, ad-hoc paydowns are available from $10,000.
HomeSec assesses property value itself rather than using valuers. That keeps the assessment focused on the security and the exit.
Where can you find official guidance on business setup and tax?
Anyone setting up a lending business will have registration, structure and tax matters to work through. Official government sources cover each of these areas.
- Structures and registrations. business.gov.au explains business structures, registrations and finance topics.
- Tax obligations. The Australian Taxation Office sets out tax obligations for businesses and organisations.
- Credit regulation. ASIC’s credit regulatory resources cover credit licensing and the obligations of credit licensees.
- Background reading. Moneysmart provides general information on borrowing and credit.
People setting up a lending business commonly obtain independent legal and tax advice that reflects their own circumstances. This guide does not set out thresholds, registration requirements or licensing conditions, because those depend on the specific activity and on official guidance.
Who can private business lending suit, and when is it not the answer?
Business-purpose lending secured by property can suit borrowers who have real estate to offer and a clear business purpose. HomeSec lends to companies, trusts and sole traders, including start-ups. Borrowers with defaults, arrears or thin credit files are not ruled out on that basis alone.
It is not the answer when:
- there is no real-estate security to offer
- the loan would sit third behind two existing mortgages
- the money is for personal or domestic purposes
- the plan is to buy a residential property in a personal name, which is regulated consumer credit under the NCCP Act
Where the need is a tax debt, the ATO describes its own options for businesses that are struggling to pay, and some businesses look at those first. Moneysmart and business.gov.au also outline other ways businesses fund their needs.
About HomeSec as a private business lender
HomeSec Business Finance Pty Ltd, ABN 50 150 013 513, has been lending since 2004. HomeSec lends almost anywhere in Australia, across metro, regional and rural areas. As a guide, HomeSec looks at towns of 3,000 or more people, and smaller populations are considered on merit.
HomeSec is a member of CAFBA, SBAA and VCCI. Because it lends for business purposes only, HomeSec is not a member of an external dispute resolution scheme and is not required to be.
The process runs from an indicative answer on the first call, to conditional approval on a short document list, to funds released in as little as 24 hours from a clean, complete scenario.
HomeSec’s Lending Managers can be reached on 1300 93 83 87, Monday to Friday, 8:30am to 5:30pm Melbourne time. The office is at Level 1, Suite 6, 1488 Ferntree Gully Road, Knoxfield VIC 3180.
Ready to take the next step?
If you are a business owner with property and a clear business purpose, you can start your application or see if you qualify. Have a rough idea of the property’s value, what is owing on it, how much you want to borrow and what the money is for. Starting takes a few minutes, and eligibility depends on the lender’s assessment.
No obligation. Eligibility is subject to assessment.
FAQ
Is private lending regulated in Australia?
It depends on the purpose of the credit. Credit provided wholly and exclusively for business and investment purposes is not regulated under the National Consumer Credit Protection Act 2009 (the NCCP Act), and the protections available to consumer borrowers do not apply to it. For official guidance on credit regulation and licensing, ASIC maintains credit regulatory resources.
What is the difference between business-purpose and consumer credit?
The difference lies in what the money is used for. HomeSec provides credit only for business and investment purposes, which sits outside the NCCP Act. Buying a residential property in a personal name, by contrast, is regulated consumer credit under the NCCP Act, so HomeSec does not fund it. Money for personal or domestic purposes is also outside HomeSec’s scope.
What security does a private lender like HomeSec accept?
HomeSec accepts residential, commercial, rural or vacant land as security. The mortgage can be first or second-ranking, and several properties can secure one loan through cross-collateralisation. The borrower’s home can be the security. A loan that would sit third behind two existing mortgages is not a fit.
Does a private lender look at credit history?
HomeSec considers credit history, but it is never disqualifying on its own. Defaults, arrears and thin credit files do not rule a borrower out. The assessment gives weight to the property security and to how the loan will be repaid. Every application remains subject to lending criteria and the lender’s assessment.
Do you need a licence to become a private lender in Australia?
This guide does not state whether a licence is needed in any particular case, because that depends on the lending activity involved. ASIC’s credit regulatory resources are the official source on credit licensing and credit licensees. People setting up a lending business commonly obtain independent legal advice, and business.gov.au covers related registration and structure topics.
This is general information only and does not take into account your objectives, financial situation or needs. All applications are subject to lending criteria, assessment and approval.