Private lending: When it can be the Right Solution

Private lending can be an excellent option for asset-rich clients when timing matters, and the mainstream banks cannot accommodate the transaction within their usual policy parameters and appetite.

It provides speed and flexibility, often in situations where the client’s overall net worth is strong - but their income profile doesn't fit a standard servicing model. Structure, transparency and a watertight exit strategy are essential.

Private lending done properly: conservative structure, clear exit strategy, and no surprises

What is Private Lending?

A private lender is a non-bank funder that lends from private capital or pooled investor funds. Private lenders commonly assess a deal through a different lens to banks, with a focus on:

• the quality of the security

• the strength and realism of the repayment plan or exit strategy

• the time required

• the overall risk management of the transaction

Private lending is often used for short-term funding, including bridging-type scenarios.

Developers use private credit regularly, particularly for speed, bridging, and mezzanine gaps, lender quality and the exit strategy speak volumes.

When private lending suits

Private lending is appropriate where there is a genuine reason a mainstream lender cannot proceed, but the client’s position is otherwise strong.

Common situations include:

• asset-rich, income-light profiles (eg high net worth clients who are not drawing a regular taxable income)

• time-sensitive purchases and settlements where delays can cost more than the interest

• complex property scenarios where lender appetite is limited (property uniqueness, land size, or other constraints)

• bridging requirements while a sale or refinance strategy is executed

For many high-net worth borrowers, private lending is not a last resort. It is a deliberate short-term tool to keep the bigger plan on track.

A recent suitable scenario I assisted with

In a matter earlier this year, private lending was suitable for an asset-rich client because the loan was conservative against high-quality property security and, most importantly, there was a clear exit strategy through the planned sale of a high value asset.

This is precisely where private lending works: strong security, defined timeframe, and a credible pathway to repayment.

Essential: a strong exit strategy

Private lending should be approached as a bridge, not a permanent arrangement. The strongest private transactions have a repayment plan that is:

• specific (what repays the loan)

• timed (when it is expected to occur)

• stress-tested (what happens if timing is extended)

Transparency is imperative: cost, term, and what happens if things change

Private lending can involve higher pricing than mainstream loans because it is typically faster, more flexible, and often short-term. It's critical the client understands the full cost and the contingencies.

Any private lending conversation should be crystal clear on:

• establishment costs and ongoing costs

• total cost over the expected term

• default interest and default provisions

• extension options and costs if the term needs to be longer than planned

  
  

Reputable private lending vs bad apples

There are some excellent and reputable private lenders in the market, and there are also bad apples. There is a risk in choosing the wrong lender or taking on terms the borrower doesn't fully understand.

Any private loan should involve clear documents, upfront disclosure of costs, and careful governance at all stages of the transaction.

Best interest and compliance

Because private lending sits outside the mainstream, it requires extra scrutiny.

In my practice, private lending is only considered after exploring all other potential options. Private transactions also undergo my broker aggregator’s compliance - so the recommendation is substantiated as being in the client’s best interest, based on their objectives, circumstances, and the available alternatives (or lack of).

Who this is for

If you’re a high net worth individual who is asset-rich, needs short-term funding, and have a clear exit strategy (sale or refinance), private lending may be an option for you.

The aim is to establish the right solution, with the right lender, on terms that are clear and understood from the outset.

If you’d like a discussion on your scenario, I can assess options across the market and tell you if a private loan could be suitable - or whether it's something a larger bank would consider.

General information only, not financial or credit advice.