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Private lending, explained

Private lenders in Australia — what they are, and how to tell them apart

A private lender is a lender that is not a bank and does not take deposits. In Australian business lending the term covers two different things: intermediaries placing other people's money under other people's rules, and lenders funding from their own balance sheet. HomeSec is the second kind — lending its own money against property, $20,000 to $5,000,000, since 2004.

A small lending team working at desks in an open office
1:05
Watch: Private Lenders Australia: How HomeSec Assesses Business Loan Applications. Paul Stone, who founded HomeSec in 2004.

See if you qualify in sixty seconds. No credit check to apply, no financials, no payments for the first six months. That's the HomeSec Advantage.

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The four kinds of lender a business owner meets

"Private lender" is used loosely, and the looseness costs people money. Here is the category laid out plainly — what each kind actually is, and when each is the right call.

Kind What it is The right call when
BankDeposit-funded, APRA-regulated, cheapest money and the slowest process: valuation, two years of financials, serviceability, committee. Three to eight weeks.When you have time, clean financials and a bank that already likes you.
Unsecured cashflow lenderLends against turnover from bank-statement data, usually $10k–$150k, repaid by daily or weekly direct debit over a fixed term. Fast to approve; priced for the absence of security.When there is no property to offer and the amount is small.
Private lender — funded by othersPlaces money from a warehouse line, a managed fund or investors, under that funder's rules. Often called a private lender; functionally an intermediary. Approval can be withdrawn if the funding line's appetite changes.Larger amounts than cashflow lending, with property security; slower than it looks, because someone else signs off.
Private lender — lending its own moneyAssesses and funds from its own balance sheet. One decision, made in-house. Speed comes from not needing a valuation, financials or a funder's consent. This is HomeSec.When there is equity in property, a business purpose, and a timetable a bank cannot meet.

Descriptions of lender categories, not of any named lender. Individual lenders vary.

Who regulates private lending

Every lender in Australia sits under the ASIC Act, the Corporations Act and the Australian Consumer Law, and a lender that provides credit to consumers must hold an Australian Credit Licence under the National Consumer Credit Protection Act. Business-purpose credit is treated differently, and it is worth understanding exactly how.

HomeSec provides credit wholly and exclusively for business and investment purposes. Credit provided for those 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. That is not a loophole; it is the line Parliament drew between lending to a household and lending to a business, and it is why the business-purpose declaration you sign is a substantive document rather than a formality. A private lender writing a personal loan under a business label is operating outside the exemption, and you should walk away from one that suggests it.

HomeSec lends for business purposes only, so we are not a member of an external dispute resolution scheme and are not required to be. What HomeSec does instead is simpler: a feedback and complaint form that goes straight to senior management and is read every day, and a named team whose credit decisions are signed by a person.

Seven questions that tell private lenders apart

Ask these on the first call. The answers separate a lender from an intermediary, and a relationship from a transaction.

  1. 1
    Whose money is it?If the answer is a fund, a warehouse or investors, the person you are talking to cannot say yes. Ask who can.
  2. 2
    Who makes the credit decision, and where?A committee elsewhere, or a Lending Manager here. The answer decides how long you wait and how many times the answer can change.
  3. 3
    What does it cost to get an answer?Some lenders charge assessment, application or mandate fees before a real answer exists. Ask what is payable before conditional approval. Here: nothing.
  4. 4
    Do you require a valuation?A valuation adds a week or more and a fee, and it is the lender's protection, not yours. Ask whether the lender assesses security itself.
  5. 5
    Is the term fixed?A fixed term with a minimum period charged is a lender's convenience. Ask what happens if you repay early, and what it costs to extend.
  6. 6
    What happens at the end?Rollover fees, re-documentation, re-pricing — or a phone call. The answer tells you what the lender thinks the relationship is.
  7. 7
    Is this loan regulated consumer credit?If the purpose is personal, it must be. If the purpose is business, it sits outside the NCCP Act and the lender should say so plainly — and should not be lending to you for a personal purpose under a business label.

What "lending our own money" changes

Most businesses calling themselves private lenders are placing someone else's funds under someone else's rules. The consequence is not that they are bad — many are competent — it is that the person you speak to cannot say yes, and the yes they eventually relay can be withdrawn if the funding line behind them changes its appetite. Three weeks in, with a settlement booked, that is the eleventh-hour problem this category is known for.

HomeSec lends from its own balance sheet, and has since 2004 — through two recessions, a mining downturn, a pandemic and a construction shakeout. When a Lending Manager here gives you an indicative answer on the first call, it is the lender's answer. When a scenario deserves a commercial call, we can simply make it, because there is no covenant to check it against.

How a private lender assesses a file

The seven questions above are how you read a lender from the outside. This is the same assessment from the inside, and it is the part of private lending almost nobody publishes. The video on this page is a recording of new applications being worked through at the office table — three files, three decisions, in about a minute. It happens to have been made on a Saturday.

What the recording shows is not a scorecard being run. It is three judgements, and each one is a judgement a bank's process cannot make.

  1. 1
    Gearing near the top of the band, carried by the exitThe first file is geared close to the ceiling for its security type and is approved anyway, because the exit is good. Gearing and exit are weighed together rather than in sequence — a high LVR with a settled sale behind it is a different file from the same LVR with nothing behind it. The band today is up to 80% on residential and 70% on commercial.
  2. 2
    Four titles, in a regional centre, and neither is an exceptionThe second file is secured across four properties rather than one, and they are in Bendigo rather than a capital city. On the recording both facts are noted and neither is treated as a problem. First or second-ranking mortgage. Cross-collateralisation across multiple properties. Your home can be the security. We lend almost anywhere in Australia — metro, regional and rural, to a guide of towns of 3,000 or more people as a guide; smaller populations on merit.
  3. 3
    A file at the large end goes to the other decision-makers, not to the decline pileThe third file is bigger than the usual size, and the response on the recording is to ring the other Joint Chief Executive and the General Manager — both named on the About page, both of whom still sign these decisions off. That is what lending our own money means in practice: the second opinion is two doors away, not a credit committee at a funder.

None of which is a promise that a file gets funded. Looking for a way to fund something is a different thing from funding everything, and the limits are stated plainly below and in what we can and cannot lend on.

What a private lender is not for

It is not cheaper than a bank, and a lender that says otherwise is either not private or not honest. It is not a way to borrow for a personal purpose without consumer protections. And it is not a solution to a business that is structurally losing money — borrowing against the family home into a structural loss makes the outcome worse, and a real lender will say so. What private lending costs and how it compares are both stated plainly here.

Questions we get on the phone

What is a private lender?
A lender that is not a bank and does not take deposits. In business lending the phrase covers two quite different things: intermediaries that place other people's money under other people's rules, and lenders that assess and fund from their own balance sheet. The difference is not academic — it decides who can say yes, how fast, and whether an approval can be withdrawn.
Is private lending legal and regulated in Australia?
Yes. Lenders are subject to the ASIC Act, the Corporations Act and Australian Consumer Law, and a private lender that lends to consumers needs an Australian Credit Licence under the NCCP Act. Business-purpose credit is different: Credit provided for those 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. That is why the business-purpose declaration matters, and why a private lender should never be writing a personal loan under a business label.
Is a private lender safe to borrow from?
The security you give is a mortgage or caveat over real property, registered on the title, with the same legal machinery a bank uses. What varies between lenders is conduct: fees before an answer, valuations you pay for, approvals that get pulled. The seven questions above are how you tell. And check the basics — an ABN, a registered address, an actual office, people with names.
Why would I use a private lender instead of a bank?
Time, and evidence. A bank needs three to eight weeks, a valuation and two years of financials that say the right thing. A private lender lending its own money against property needs the property, the purpose and the exit. If the bank's timetable and evidence requirements fit your situation, use the bank — it is cheaper. If they do not, a private lender is how the equity in your property becomes money this week.
Is private lending more expensive than a bank?
Yes, generally — it is priced for speed, for the absence of financials, and for the risk the lender carries without a valuation. What it is usually cheaper than is an unsecured cashflow loan for the same amount, and what it is always cheaper than is the deal that did not settle. We do not publish a rate, because a rate with "from" in front of it tells you nothing about your file.
What is the difference between a private lender and a private mortgage lender?
Nothing, in practice. A private mortgage lender is a private lender whose loans are secured by a mortgage over property — which describes every loan HomeSec writes. The phrase is more common in the residential and investment world; "private business lender" is the same thing with the purpose named.
Does HomeSec use its own money?
Yes. HomeSec has lent its own money since 2004. There is no warehouse line, no fund and no investor mandate behind a loan, which is why an approval here is not withdrawn because a funding line changed its appetite — there is no funding line.
How do I check a private lender is who they say they are?
Look for a legal entity with an ABN, a registered office you could visit, named people with a history in the industry, and a published complaints process. Search the entity name on ASIC Connect. Read what the lender says it does NOT do — a lender that says "we do not fund consumer purposes" or "we decline structural losses" is describing a credit policy, which is what a real lender has.
How do private lenders assess a business loan application?
On the security, the purpose and the exit, rather than on financials and a serviceability test. No cashflow records, no sworn valuation, no financial records, no minimum trading period. What is being weighed is how much equity the property carries, what the money is for, and how the loan gets repaid — and the three are weighed together, so a file geared near the top of the band can still be written where the exit is sound.
Can I use more than one property as security, and does it have to be in a capital city?
First or second-ranking mortgage. Cross-collateralisation across multiple properties. Your home can be the security. We lend almost anywhere in Australia — metro, regional and rural, to a guide of towns of 3,000 or more people as a guide; smaller populations on merit. A loan secured across several titles in a regional centre is ordinary business here rather than an exception, which is not true of every lender that calls itself private.
Who decides my loan at HomeSec?
Every application is read by a Lending Manager and every credit decision is signed off by a person. We do not use artificial intelligence to assess, approve, decline or price a loan. The decision is made in Knoxfield, by the credit team, and it is signed off by a person whose name is on the About page.
Talk to a Lending Manager

Ask us the seven questions. Then tell us the amount, the purpose and the property, and we will tell you whether we are the right lender for it — and if we are not, who is. 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.

What a private lender actually lends

Lending our own money since 2004. These are the shapes it takes.

Lending against propertySmall business loansFast private mortgagesSecond mortgagesFast second mortgagesFirst mortgagesNo doc business loansCommercial loansFast business loansStart-up business loansCaveat loansOpen term, no minimumEquity releaseWorking capitalSecured against your homeBuying a businessRefinancing a facility
Sixty seconds, no documents

See if you qualify in sixty seconds

Three short questions, no credit check to apply and no financial statements. A Lending Manager reads it and calls you back with a real answer — not a call centre, not an algorithm.

That's the HomeSec Advantage.

See if you qualify Call 1300 93 83 87 Mon–Fri, 8:30am – 5:30pm Melbourne time

Reviewed by Paul Stone, Joint Chief Executive

1300 93 83 87 homesec.com.au
Get funded Call 1300 93 83 87

Before you go — $20,000 to $5,000,000 against property equity

Business funds can be available in as little as 24 hours — with no payments for up to 6 months.

First and second mortgages. No financials, no cashflow records and no sworn valuation needed. Every application is subject to assessment and approval.

See if you qualify

Or talk to a Lending Manager on 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.