A private lender's decision is made on five things — security, LVR, purpose, identity, and exit. Have all five evidenced in writing before you call, and a clean business deal moves to indicative terms inside 48 hours. Most private loan applications that die in the first 48 hours die for the same five reasons. Four of those reasons are fixable in an afternoon. One isn't — and that's the one most borrowers think they have but don't.
This guide walks through each of the five, what evidence the lender actually needs, what kills the file at each gate, and the one most borrowers fail. The framework is what we apply at Esteb Capital to every direct private credit deal under $5M — business and commercial purposes only.
1. Security — what the lender is taking, and what it's worth
TL;DR: The lender needs to know exactly what they're securing against — what it is, what it's worth, and what's already on it. Vague "it's worth about" estimates with nothing supporting them are the most common reason a file stalls at the first gate.
What we need on every deal:
- The property address and title reference. Specific lot, plan, and volume-folio. Not "the unit on King Street." A title search lists the encumbrances and confirms the legal description.
- A recent indication of value. Council CV is a floor, not a number we'll lend against. Agent appraisal in writing is better. A current full valuation is best. The more recent and independent, the less weight the file places on the borrower's stated number.
- Current mortgage statements if anything's already on the title. We need to know the actual balance, not just that an encumbrance exists. A title search lists encumbrances; a statement tells us where they sit today.
- Evidence of ownership. Title search or recent settlement statement showing the borrower (or borrowing entity) on title.
What kills files at this gate: vague valuations with nothing supporting them, undisclosed encumbrances, and properties where the borrower isn't actually on title yet. A "we'll have title in a few weeks" answer doesn't get past gate one — see the case study in what a private lender actually looks at for what happens when valuable security isn't yet available.
2. LVR — realistic, not aspirational
TL;DR: Loan-to-value ratio is the loan amount divided by the security value. It's the single biggest pricing driver — and the number the file gets priced against is the one at indicative-decision stage, not what you tell us on the phone. Realistic value beats aspirational value every time.
Three pricing bands as at May 2026:
- Under 65 per cent LVR, first mortgage, clean security: 8 to 11.5 per cent per annum. Establishment fees 1 to 2 per cent. This is the cleanest band — the most lender competition, the fastest indicative decisions.
- 65 to 75 per cent LVR, first mortgage: 10 to 13.5 per cent per annum. Establishment fees 1.5 to 2.5 per cent.
- Over 75 per cent LVR: case-by-case, often declined for first-mortgage deals. Possible at higher rates on caveat or second-mortgage structures (12 to 18 per cent pa, 2 to 3 per cent establishment).
What matters here: realistic value, not aspirational. If the borrower says $1.2 million and the valuation comes back at $950k, the deal doesn't necessarily die — but the LVR jumps a band and the pricing follows. Borrowers who anchor their request to a defensible value get indicative terms inside 48 hours. Borrowers who anchor to a hopeful value get a "we'll need to see the valuation first" response and a slower deal. For the full breakdown of LVR bands and what they mean for total cost, see how LVR works in private lending.
3. Purpose — articulated in commercial language with supporting context
TL;DR: Why you need the money — articulated specifically in commercial language, with the supporting context. "Working capital" alone isn't a purpose; it's a category. Specific purposes get specific decisions. Vague purposes get vague answers, slow.
How to articulate each common purpose type:
- Acquisition: purchase contract, settlement date, deposit position, what's the asset and what's the commercial play. "Buying 12 Smith Street to add to the rent roll" reads differently than "buying property."
- Working capital: what specifically — supplier payment, tax liability, deposit funding for another deal, payroll bridge while a receivable lands. Name the line item.
- Development phase: which phase (DA, site works, vertical construction, residual stock), what's holding up the existing finance, what changes between now and exit.
- Refinance: from whom, why, the exit pathway you're solving for. A refinance to pay out a maturing facility reads differently from a refinance to release equity for a new acquisition.
What kills files at this gate: if the purpose is consumer — owner-occupied home, personal loan, debt consolidation — Esteb Capital cannot help regardless of how strong the security is. That's regulated consumer credit. Esteb & Co (Australian Credit Licence #389087) is the sister brand for those.
4. Identity — the entity structure and the people behind it
TL;DR: Who's borrowing — the legal entity, the controlling party, and the supporting documents. Pty Ltd? Trust? Partnership? Sole trader? Each requires different evidence, and the wrong document set delays settlement.
What we need:
- The borrowing entity. Pty Ltd: company extract from ASIC, plus the constitution if it's been amended. Trust: trust deed and any amendments, including the most recent change of trustee if applicable. Partnership: partnership agreement. Sole trader: ABN and director ID.
- Director or trustee identification. Driver licence plus one other government-issued ID. Verification of Identity (VOI) is increasingly handled through Australia Post or a digital identity provider at the borrower's solicitor.
- Current ABN. Not lapsed, not under review. ABN status takes 60 seconds to check on the ABN Lookup register before the deal goes to indicative terms — borrowers should check it themselves first.
- Directors' personal guarantees. For company borrowers, these are usually required. Better to find out at the indicative stage than at signing — see how directors' personal guarantees work for what they involve and when they can be limited.
What kills files at this gate: undisclosed corporate structure complexity. A "the borrowing entity is a Pty Ltd" answer that turns out at week two to be a Pty Ltd as trustee for a discretionary trust, with two layers above it and an offshore beneficiary, is a different deal — and a slower one. Flag the structure on day one.
5. Exit — the one most borrowers fail
TL;DR: Exit is how the loan ends. Most borrowers think they have one. The lender's bar is higher. A credible exit names the source, the date, and the risk. Vague exits get declined regardless of how good the security looks.
A credible exit answers three questions: where does the money come from to repay; when does it land; what could go wrong with that timing.
Three real examples of weak vs credible exits:
"Refinancing to a bank" isn't an exit. It's a hope. A credible refinance exit reads: "Westpac pre-approval issued 14 March 2026, conditional on six months trading history which the borrower hits on 1 August 2026, our loan term covers four months past that date." Source named, date specific, risk identified.
"Selling the property" isn't an exit. It's intent. A credible sale exit reads: "Property listed with [named agent], 90-day expected sale at [specific price] supported by [two comparable sales lodged with the file], our loan term covers six months past listing."
"Completing the development" isn't an exit. It's optimism. A credible completion exit reads: "Construction 70 per cent complete, PC date June 2026, end-sales on contracts at $X total, our loan repays from settlement proceeds with $Y of margin."
The pattern: source, date, risk. Name all three. This is the gate most borrowers fail. Strong security plus a vague exit gets declined. Moderate security plus a watertight exit gets indicative terms inside 48 hours. For the full structural treatment, see how private lenders assess exit strategies.
When private lending isn't the right tool
TL;DR: Private lending is the wrong tool when the purpose is consumer, when bank pricing is accessible and the timeline is flexible, or when the exit isn't credible. Recognising this saves both sides time.
Specifically:
- Consumer purpose — owner-occupied home, personal loan, debt consolidation. That's regulated consumer credit. Esteb & Co (Australian Credit Licence #389087) handles those — the licensed pathway for retail and regulated lending in Australia.
- Time-flexible, long-tenure borrowing where bank pricing is accessible. The rate differential isn't worth paying for speed you don't need.
- No credible exit. If you can't articulate the source, date, and risk of repayment, a private loan creates a worse problem than the one it solves.
The five-things summary
- Security — title reference, value evidence, existing mortgage statements, proof of ownership.
- LVR — realistic, not aspirational. Three pricing bands as at May 2026: under 65%, 65-75%, over 75%.
- Purpose — articulated in commercial language with the specific use of funds named.
- Identity — entity documents, director/trustee ID, current ABN, guarantee position.
- Exit — source, date, risk. Named.
If you've got the five things ready and a business or commercial deal that needs to move, the form at estebcapital.com/private-lending goes directly to the funder. Same-day reply.
General information only. Esteb Capital is a trading name of MCDR Group Pty Ltd (ABN 11 689 007 734). Esteb Capital lends for business and commercial purposes only and is not regulated under the National Consumer Credit Protection Act 2009 (Cth). For consumer credit needs, see Esteb & Co (Australian Credit Licence #389087).