Private lending in Australia is non-bank, asset-secured business finance, typically priced 8 to 14 per cent per annum for first-mortgage deals as at May 2026, with settlement in 5 to 15 business days against bank timeframes of 6 to 12 weeks. It is funded by private credit funds, family offices, and high-net-worth investors rather than by deposit-taking banks regulated by APRA. It exists because Australian banks apply rigid serviceability templates that exclude many genuine business borrowers — developers between projects, SMEs with lumpy cash flow, investors transacting against equity rather than payslip income.
This guide is for the business owner, broker, or commercial property buyer who's hit a bank wall. You'll get the structural difference between bank and private credit, why banks decline good deals, the three things a private lender actually scores — in order — and a real deal walkthrough showing where the cost of a private loan actually lives.
What a private lender actually is
TL;DR: Private lending in Australia is mortgage-backed or asset-backed credit funded by non-ADI lenders — private credit funds, family offices, high-net-worth investors — issued exclusively to business and commercial borrowers. The structural difference is where the money comes from, and everything else flows from that.
A bank holds your loan on its deposits-funded balance sheet. That balance sheet is regulated by APRA — capital requirements, liquidity coverage ratio, net stable funding ratio. The regulation is what makes a bank a bank, and it's also what makes a bank slow. A private lender holds your loan on its own equity, or on capital from a small pool of wholesale investors. There are no public deposits in the structure, so the regulatory machinery isn't sitting on every decision.
The Australian private credit market reached approximately $230 billion in assets under management by early 2026 (EY-Parthenon estimate: A$234.5b), having nearly tripled over the past decade and growing roughly 9 per cent year-on-year through 2025. It's a mature market — quiet because private credit doesn't advertise on bus stops, not because it's small.
"Private lending" in Australia in 2026 usually means one of three structures:
- Direct private credit — a single funder lends from their own capital. Settles in 5 to 10 business days. Prices around 10 to 14 per cent pa for first mortgages as at May 2026. Single decision maker. Minimal committee.
- Mortgage trust / pooled fund — wholesale capital pooled into a managed vehicle. Slower at 2 to 4 weeks. Cheaper, often 8 to 11 per cent pa for clean first-mortgage deals.
- Brokered private — a credit-licensed broker assembles the lender from a panel. This is what our affiliated brand Esteb & Co (Australian Credit Licence #389087) does for deals where regulated credit assistance is appropriate.
Esteb Capital operates in lane one — direct private credit — and selectively in lane three (matching to panel funders). Every loan we fund is for business, commercial, or investment purpose, which is the legal basis for our exemption from the National Consumer Credit Protection Act 2009 (Cth), Schedule 1, s5(1)(b).
Why banks decline good deals that have nothing wrong with them
TL;DR: Banks underwrite borrower serviceability — verified income, debt-to-income ratios, sustained capacity to meet repayments. Private lenders underwrite deal viability — security value, LVR, exit pathway, and the borrower's ability to execute the exit. Same file, different question, different answer.
A bank's credit committee answers one question: does this deal fit our policy matrix? Serviceability ratio, debt-to-income, time in business, security category, post-code restrictions. If a single box doesn't tick — even one with nothing to do with whether the deal makes commercial sense — the deal dies in committee. A self-employed developer with lumpy income and a paid-down property fails the bank serviceability template and passes private credit underwriting against the same property. Not because the deal got better. Because the question changed.
Median time from application to settlement for an SME secured business loan at a major Australian bank typically runs 8 to 12 weeks. At a competent private lender, that same deal settles in 5 to 15 business days. The difference is structural, not effort. Banks have to layer compliance, internal policy, and committee process onto every decision. A private lender doesn't.
For a fuller breakdown of the four reasons banks decline business loans — including the one that has nothing to do with your file — see why your bank said no to that deal.
The three things a private lender actually scores, in order
TL;DR: Private credit underwriting in Australia runs in this order: security, exit, deal. Not equally weighted — security has to clear before the other two are assessed. Recovery is the floor under every other consideration.
One — security. What's the asset? What's it worth? What's our position — first mortgage, second mortgage, caveat? For a clean first-mortgage deal under 65 per cent LVR, you're looking at 8 to 11.5 per cent pa as at May 2026. Push to 65 to 75 per cent LVR and you're in the 10 to 13.5 per cent range. Caveat or second mortgage runs 12 to 18 per cent. Pricing reflects the lender's recovery position, not a number we made up.
Two — exit. This is the one borrowers underestimate. We don't just ask "can you make the loan." We ask "how does this loan end?" Refinance to a bank in 12 months. Sell the asset. Complete the development and exit through end-buyer settlements. The exit has to be credible and time-bound — most of our terms run 6 to 24 months. A loan with no clear exit is a loan that becomes a problem.
Three — deal. Does it make commercial sense? Is the borrower sophisticated? Have we got a story we can stand behind?
At Esteb Capital we write directly between $100,000 and $5 million. Larger deals get syndicated or referred. Anything that doesn't fit the three above, we decline — regardless of how the rate looks on paper. For a full walk-through of how to package a deal so each gate clears cleanly, see how to present your deal to a private lender.
What private lending actually costs (and where the real cost hides)
TL;DR: Headline rate is the smallest part of the cost conversation. Establishment fees, legal and valuation costs, and — crucially — the discharge clause structure can shift the borrower's effective IRR by 200 to 400 basis points over a 12-month term. Solve for IRR, not nominal coupon.
The pricing bands above (8-11.5% under 65% LVR, 10-13.5% to 75% LVR, 12-18% on caveat/second mortgage) reflect the broader RBA cash rate environment. The RBA cash rate sits at 4.35% as at May 2026 (RBA F1.1) following a 25-basis-point rise on 5 May 2026 — the third consecutive increase this year. Private credit pricing has held broadly steady through this cycle while bank funding costs rose. Australian small business variable lending rates (RBA F7 series) sit at approximately 6.9 per cent as at early 2026, so the private premium for fast-and-flexible execution is roughly 200-400 basis points over equivalent bank pricing.
A $1,000,000 first-mortgage deal at 11% pa, 12-month interest-only, 1.5% establishment fee, $5,000 legal fees, and $2,500 discharge fee carries a stated "rate" of 11% but a borrower IRR of approximately 13.0-13.5% when fees are amortised across the term and exit costs are included. On a 6-month deal the same fee structure pushes the IRR closer to 14.5-16% because the establishment fee amortises over half the term.
Case study — the discharge clause that nearly cost $14,700
TL;DR: Real deal, anonymised. Gold Coast commercial property investor, $1.8M restructured to $1.6M after a probate complication. Loan documents required an additional month of interest at discharge — regardless of notice given. On $1.6M at 11%, roughly $14,700 in penalty interest for paying out on time. The borrower's solicitor caught it. We renegotiated before signing.
A Gold Coast-based commercial property investor came to us in late February 2025 through a Connective-accredited broker who couldn't fund the private credit piece himself. The borrower was acquiring a NSW commercial property through a special-purpose Pty Ltd vehicle. Indicative terms had already been worked through: $1.8M net to borrower, 11% pa, 1.5% establishment fee, 12-month interest-only, registered first mortgage over an inherited Sydney apartment as primary security.
Two weeks in, the deal hit a known-but-underestimated obstacle. Probate on the inherited apartment hadn't completed because the deceased had died intestate. Title remained in the estate, not the borrower. The broker's estimate was two to three more months before clear title — well past the commercial settlement deadline.
We restructured. The borrower held an unencumbered investment unit in another Sydney metro suburb worth approximately $850-950k. We substituted that asset as primary security, accepted that the inherited apartment would be added later via a release clause once probate completed, and reduced the loan from $1.8M to $1.6M at 11% pa, 1.5% establishment, 12-month interest-only, registered first mortgage. Roughly 60% LVR overall. From introduction to executed loan documents was approximately three weeks.
One detail nearly slipped through at signing. The loan documents contained a discharge clause requiring an additional month of interest paid at exit irrespective of notice given — effectively 13 months of interest on a 12-month deal, plus a separate 30-day notice penalty if discharge notice was less than 30 days. On a $1.6M loan at 11% pa, that's roughly $14,700 in penalty interest for paying out on time. The borrower's solicitor flagged it. We renegotiated the clause before signing.
What this deal illustrates:
- Private credit's structural advantage is the ability to restructure mid-deal when bank-style underwriting would have collapsed the transaction.
- LVR discipline matters more than headline loan amount — dropping from $1.8M to $1.6M kept the deal inside our credit appetite when the security profile changed.
- Discharge clauses and exit penalty structures need legal review separately from the rate. The headline coupon rarely tells the full cost story. The cheapest rate with the wrong discharge terms costs more than the higher rate with clean discharge terms.
When private lending isn't the right tool
TL;DR: Private lending is the wrong tool when the borrower has time and qualifies for bank pricing, when the exit isn't credible inside the loan term, when the security is marginal at high LVR, or when the purpose is consumer rather than business.
Specifically:
- The borrower has time and qualifies for bank pricing. Don't pay private credit pricing for speed you don't need. The rate differential isn't worth it.
- The exit isn't credible inside the term. A 12-month private loan with no realistic refinance or sale exit is how borrowers end up rolling at worse terms.
- The security is marginal and the LVR is high. Carry cost compounds risk for both sides.
- The purpose is consumer. Owner-occupied home loan. Personal loan. Debt consolidation. These are regulated consumer credit and outside Esteb Capital's scope. For those, see our sister brand Esteb & Co — Australian Credit Licence #389087 — which is the licensed pathway for retail and regulated lending in Australia.
Frequently asked questions
Is private lending regulated in Australia?
Private lending to businesses or for commercial/investment purposes is generally not regulated under the National Consumer Credit Protection Act 2009 (Cth) — the exemption sits at Schedule 1, s5(1)(b). Private lending to individuals for personal or domestic purposes is consumer credit, requires an Australian Credit Licence, and is outside Esteb Capital's scope. Where regulated credit assistance is appropriate, Esteb & Co (ACL #389087) is the licensed pathway.
How fast can a private loan settle?
A clean first-mortgage deal at Esteb Capital settles in 5 to 10 business days from indicative-decision to disbursement. Caveat-secured short-term facilities can settle inside 48 hours where speed is the dominant constraint — though caveat pricing reflects the weaker enforcement position the lender accepts.
What's the minimum and maximum loan size?
Esteb Capital writes loans from $100,000 to $5,000,000 directly. Larger transactions are typically syndicated or referred.
Do you lend against residential investment property?
Yes, where the borrowing entity and purpose are commercial. A property investor borrowing against equity for further investment, deposit funding, or portfolio working capital is a valid business borrower under the NCCP exemption. A homeowner borrowing against their owner-occupied home for personal purposes is consumer credit and outside Esteb Capital's scope.
The bottom line
Private lending in Australia in 2026 is a mature, structurally legitimate funding channel for business and commercial borrowers who need speed, flexibility, or transaction structures that don't fit the bank serviceability matrix. The right private deal is faster, more flexible, and resolved at the asset and exit level rather than the borrower's payslip. The wrong private deal is paying private credit pricing for a transaction that bank pricing would have served.
If you have 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).