Why Private Credit Is Booming in Australia: The Rise of Non-Bank Lending
A Quiet Revolution in Lending
In recent years, a quiet revolution has swept through Australia’s financial landscape. It hasn’t made the nightly news or sparked political debate — but it’s reshaping the way everyday Australians and businesses access capital.
That revolution is private credit.
Once the domain of high-net-worth investors and shadowy financiers, private credit — also known as non-bank lending — has gone mainstream. With banks tightening credit standards, increasing regulation, and slow approval timelines, a growing number of Australians are turning to private lenders for speed, flexibility, and access.
But what exactly is driving this surge in private credit? And what does it mean for the future of finance in Australia?
This article explores how private credit has evolved, why borrowers are increasingly bypassing the banks, and how non-bank lenders are filling crucial funding gaps in sectors from small business to property development.
What Is Private Credit?
Private credit refers to loans provided by non-bank entities, including private funds, high-net-worth individuals, and specialist lenders. These loans are typically asset-backed, meaning they’re secured against real estate, equipment, invoices, or other forms of collateral.
Unlike banks, which must adhere to strict regulatory frameworks, private lenders have greater flexibility in how they assess risk and structure deals. This allows them to operate in niches that banks won’t — or can’t — service.
In Australia, private credit encompasses:
Bridging and mezzanine loans
First and second mortgages
SMSF lending and investment-based lending
The Post-COVID Shift: Why Traditional Banking Fell Behind
The COVID-19 pandemic left deep scars on Australia's economy. While the Reserve Bank of Australia cut interest rates to record lows and the government rolled out support packages, many businesses and individuals were left stranded when they needed liquidity the most.
Why? Because the big four banks — ANZ, Commonwealth Bank, NAB, and Westpac — became more conservative. They tightened credit assessment criteria, prioritised existing clients, and lengthened approval timelines.
For businesses and individuals in urgent need of capital, this simply wasn’t good enough.
Private lenders filled the gap — offering funding within days, not weeks or months. Many borrowers experienced for the first time the power of dealing with a nimble, relationship-driven lender who wasn’t bogged down by bureaucracy.
The Speed Factor: Time Is Money
A common theme among borrowers who have moved to private lending is urgency. Whether it’s a builder needing fast drawdown to avoid penalties, or a business owner needing to pay suppliers before EOFY, timing matters.
Banks often take 4 to 6 weeks — or longer — to assess and approve even simple loan applications. Meanwhile, private lenders like Renown Lending can often assess, approve, and fund loans in under 72 hours, especially when the borrower provides full documentation.
This agility is one of private credit’s biggest advantages.
Who’s Using Private Credit — and Why?
1. Small and Medium Enterprises (SMEs)
SMEs make up over 97% of all Australian businesses, but they struggle the most when it comes to accessing bank finance. Traditional lenders prefer large, established corporations with years of trading history and strong balance sheets.
Private credit providers understand that SMEs are often rich in potential but cash poor. They assess risk differently — looking beyond just numbers on a spreadsheet — and offer creative solutions tailored to business needs.
2. Property Developers and Builders
With construction costs rising and timelines constantly shifting, developers often need funds between milestones. Banks, wary of overexposure to real estate, frequently under-lend or refuse to lend altogether.
Private lenders step in with bridging loans, mezzanine finance, and second mortgages — allowing developers to finish projects, refinance, or release equity as needed.
3. Individuals Seeking Bridging Finance
Whether buying a new home before selling the old one, paying off unexpected ATO debts, or finalising a divorce settlement, individuals often need short-term funding fast.
Private lenders can offer bridging finance secured by residential or investment property — and with flexible repayment terms.
4. Investors and SMSFs
Investors, particularly those managing Self-Managed Super Funds (SMSFs), are increasingly using private credit to access stable, fixed returns backed by real assets. The rise in wholesale investment funds has also democratised access to this once-elite asset class.
The Lending Landscape: Data Behind the Trend
According to a 2025 Deloitte report, private credit in Australia has grown by over 25% annually since 2020, with assets under management (AUM) now surpassing $100 billion. This is being driven by both demand (borrowers needing flexible capital) and supply (investors seeking yield in a low-interest-rate world).
Other key stats include:
60% of commercial borrowers in 2024 explored non-bank options before approaching their traditional banks.
Over 70% of development projects under $20 million in NSW and Victoria are now partially or fully funded by private lenders.
1 in 3 brokers now regularly place loans with private credit funds or family office-backed lenders.
This isn’t a temporary shift. It’s a structural evolution.
Why Borrowers Prefer Private Lenders
Let’s break it down into the five key reasons:
1. Speed
Fast approvals, fast settlements. Time-sensitive opportunities demand quick decision-making.
2. Flexibility
Private lenders offer custom loan terms — interest-only options, capitalised interest, balloon payments, or bespoke repayment schedules.
3. Accessibility
Self-employed? New ABN? Poor credit history? Private lenders can still help if you have strong collateral or a viable exit strategy.
4. Personal Relationships
Private credit providers often work closely with brokers, accountants, and borrowers directly. They make decisions with people — not algorithms.
5. Certainty
Once approved, funding is secure. No last-minute surprises, policy changes, or delays due to "head office review."
Case Study: When the Bank Said No, Private Credit Said “Let’s Chat”
When Melbourne-based café owner Sarah M. was told by her bank that she didn’t qualify for a business overdraft despite 10 years in operation, she was ready to give up.
A broker introduced her to a private lender who reviewed her books, visited her business, and funded a $150,000 loan within 48 hours — secured against her commercial lease and equipment.
That cash flow allowed her to renovate, expand seating, and double revenue within six months. The loan was repaid early, and she’s since used private credit to open a second location.
The Risk Factor: Is Private Credit Safe?
Private credit isn’t without risk. Interest rates are typically higher — reflecting the increased risk and the speed of funding. Terms are shorter. And if repayments are missed, lenders can move quickly to enforce.
But for many borrowers, these trade-offs are worth it — especially when a time-sensitive opportunity is at stake.
Borrowers must always do their due diligence. Understand the lender. Read the term sheet. Work with a trusted broker or legal adviser. And ensure there’s a clear exit strategy.
Regulatory Landscape and Transparency
Unlike banks regulated under the Australian Prudential Regulation Authority (APRA), private lenders fall under ASIC and the Corporations Act. This means there’s a spectrum — from well-established, professional credit funds to risky operators.
The rise of platforms like the Australian Finance Industry Association (AFIA) and increasing industry self-regulation is helping bring transparency and professionalism to the sector. Borrowers are encouraged to work with AFCA-accredited lenders and those who provide clear disclosure documents, especially for business-purpose loans.
What the Future Holds: Private Credit in 2030 and Beyond
Australia’s private credit market is maturing rapidly. Institutional investors are entering. SMSFs are allocating more capital. And lenders are adopting more technology to assess deals and reduce risk.
Looking ahead, we’ll see:
Blended finance models: where private credit complements bank loans.
Tokenisation and digital platforms: enabling faster deal execution and lower costs.
Stronger regulation: to protect borrowers while encouraging competition.
But the core reason for private credit’s rise will remain the same: Australians need capital, and banks can’t always deliver it.
Final Thoughts: A Paradigm Shift in Lending
The rise of private credit in Australia isn’t a fluke or a fad. It’s a reflection of changing borrower needs, a shifting regulatory environment, and a more agile, entrepreneurial financial sector.
At its best, private credit provides access, speed, and opportunity to those who are underserved by traditional banks. And in an economy that thrives on small businesses, innovation, and property development, that makes it more than a financial trend — it makes it a catalyst for growth.
If you’re looking to finance your next move — whether that’s buying, building, or expanding — don’t just knock on the bank’s door. Consider what private credit can offer. It may just open a door the banks closed long ago.
