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Private finance

Private credit: the market above the banks

Private credit is lending by funds rather than banks, and in Australia it has grown into a serious market for property, corporate and business deals. For a borrower with a real transaction and a clear story, it is often the difference between a deal happening and a deal lapsing. Here is how that market works.

By Joshua James, Ace Lending Solutions. Updated 26 October 2026. Figures checked against the sources listed below.

What private credit means here

Private credit funds raise money from investors, including superannuation funds, family offices and wholesale investors, and lend it directly to businesses and property projects. The Reserve Bank's October 2026 Financial Stability Review puts private credit at around 10% of total business debt and less than 2% of financial system assets, with non bank lenders as a whole at about 6% of financial system assets. ASIC has reported on the market twice in recent years and describes it as growing quickly, with real estate lending a large share of it.

For a borrower, the practical difference is who makes the decision and what they care about. A fund can take a view on an asset, a sponsor and a plan in a way a bank's credit policy will not allow, and can move faster. The price reflects that, and so does the documentation.

What private credit funds lend against

How a larger deal actually runs

  1. A deal summary. What the money does, how much, the security, the sponsor, the numbers and the exit, on a few pages. This is what gets read.
  2. Indicative terms. A funder with appetite comes back with an indicative term sheet: amount, price, fees, security, covenants and conditions. Several funders at this stage is the point of using a broker.
  3. Due diligence. Valuations, financials, legal and title work, quantity surveyor on a build, background on the sponsor.
  4. Credit approval and documents. Formal approval, then security documents, often with conditions to satisfy before the first drawdown.
  5. Drawdown and monitoring. Funds flow, then reporting through the life of the facility, which is heavier than a bank term loan on a small business.
Compare on total cost, not the rate

Larger private facilities carry establishment fees, line fees on undrawn amounts, legal and valuation costs, monitoring fees and sometimes exit fees. Two term sheets with the same rate can be a long way apart once the facility is drawn and repaid. The job is to model the cost over the real timetable.

What the regulators are watching

ASIC surveilled private credit funds through 2024 and 2025 and published its findings in November 2025, flagging inconsistent approaches to valuations, fees, conflicts and how defaults are defined and reported. Its 2026 work program includes further surveillance of funds lending against real estate, updated guidance, and a look at non bank lending to small business. The Reserve Bank has noted that funds concentrated in property lending are exposed to property stress, and that one larger developer insolvency led to increased redemption requests and tighter funding for some funds.

None of that should put a borrower off. It does mean the funder matters: whether they have committed capital available now, how they handle a deal that needs more time, and what their documents say about default. Those are questions to ask before signing, and they are a large part of what a broker is for.

Private lending for business or investment is unregulated

Most private lending is for a business or investment purpose, which sits outside the National Credit Code. That is part of why it moves fast. It also means the consumer protections attached to a regulated home loan do not apply: the loan is short, the cost is higher, default interest can be steep, and the security can be enforced quickly. Read the terms, take legal advice, and be sure of your exit before you sign.

Common questions

How large a deal can private credit fund in Australia?

From a few million to well into the hundreds of millions, with different funders at each level. The practical issue is matching the deal to funders whose mandate and cheque size fit; the wrong funder for the size usually just does not reply.

How long does a larger private credit deal take?

Indicative terms can come back within days where the summary is clear. From there, due diligence, approval and documents usually mean weeks rather than days, and longer on a complex asset or structure.

Do I need to be a large company?

No. Much of this market funds private businesses and family owned groups. What matters is verifiable numbers, a credible plan and security or earnings that support the facility.

Is private credit safe to borrow from?

The funders are professional lenders, and the terms are commercial rather than consumer. Read the facility documents with a lawyer, understand the covenants and what happens if a date slips, and check that the funder's capital is actually available rather than subject to raising it.

Sources

General information only, not credit advice. It doesn’t take your objectives, financial situation or needs into account. Rules and figures change; check them, or talk to Joshua, before you rely on them.