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What You Need To Know About Private Lending

Asset based, real estate private lenders are non-bank mortgage lenders or private individuals who loan money to get better returns on their investments by lending to businesses, secured against properties. Sometimes, it's also called peer-to-peer lending. Where major banks have strict lending criteria, private lenders have a more opportunity-centric approach in funding businesses, eliminating the cumbersome approval process.

Melbourne Private Lender

Why consider private lending?

Private lending is a niche loan product that serves very specific purposes. Is private money lenders' interest rate higher? Generally, yes. Why pay more when any would get you from point A to point B, you asked?
In most cases, the answer is speed. Whilst traditional lenders would normally take an average of 6-8 weeks to approve a loan, private lenders could often do it in the same day, and ofen, within-hour of reviewing the application. 

Who is private lending for?

In most cases, people who acquire private loans are business owners who require short term, immediate funding to "bridge" a shortfall for urgent or golden business opportunities, or developers who form a new, special purpose company to work on specific project, therefore not having financials to show.

Some of the private lending services / solutions Twelve Grains Capital could assist with with:


  • Development finance

    Business bridging loan

  • Refinance / cash-out

  • Caveat / second mortgage

  • Cross-collateralisation

  • Mezzanine / distressed construction loans

  • Notice to complete loans

  • Call option finance

  • Receivership finance

  • Trade finance

  • Tax debt loan

  • Wind-up notice


Like any other loans, private financing does carry a level of risk. However, it is important to note that private lenders, as well as any traditional lenders, are regulated by the government in Australia, albeit by different regulators.

Some of the PROS of private lenders:

  • Easy access and fast turnaround - less paperwork, less headache.

  • No background/credit check - private money lenders only care about the security property and your exit strategy.

  • Flexible term - generally, private lenders are more flexible when it comes to security type and serviceability requirements.

Some of the CONS are:

  • Origination cost - establishment fee of 2-5% of loan amount on top of interest rate is not uncommon, add more (brokerage) if the loan is introduced by a specialist.

  • Interest rates - there is rate for risk. Generally private lenders are expecting a return of 9-15%pa, some even expect 20%.

  • Short term loans - unlike banks that allow you to pay back in 30 years, most private lenders expect you to pay the loan back in 6-12 months, some of the more lenient ones will allow a couple of years.

HOW DO I QUALIFY for private finance?

Most private lending services will only lend on business purposes (non-coded / non-NCCP regulated loans). Business purposes can mean purchasing commercial property, cash out to assist with cash flow of the business, or purchasing properties under company structures. The funds can't be for personal use, e.g. purchasing a residential property for owner occupation. You will be required to sign a declaration that the fund is to be used for business purposes.

Lenders will make decision based on 3 things:


  • Security (location, LVR, asset class, etc)

  • Purpose

  • Exit strategy

WHEN SHOULD I APPLY for private lending?

Turnaround time for private money lenders is generally a lot quicker than traditional lenders. Some lenders can release funding in as little as 24 hours, while most can set a deal in 2-3 weeks.​ It all depends on the complexity of the deal, size, location (accessibility to valuers), etc.

Ideally you'd want to make contact with private lenders within a month or two before you need the funds, this way it gives you and the lender enough time to structure the deal appropriately.


Twelve Grains Capital access private mortgages from a portfolio of high net worth investors who align with our goals and beliefs. For real-estate-secured business loans, we eliminate restrictive red tapes to settle deals quickly where most banks fail.

We specialise in loans between $2m to $70m+ for:

  • First mortgages (up to 70% LVR)

  • Stretched mezzanine debt 

  • Bridging finance

  • No presale construction loan and development finance

  • Rates from 6.99% interest only

Urgent business finance solution (settled in as little as 48 hours!):

  • Interest rates: from 1%pm 

  • Loan Size: $100k to $50 million. Larger loans considered.

  • 1st and 2nd mortgage 

  • Up to 70% commercial/residential

Security options:

  • Property / rural / residential & commercial

  • Vehicles, plant and equipment

  • Shares and jewellery 

  • Specialised security 

  • Variety of cross collateralised security options

Twelve Grains Capital provide private lending services to Australia-wide clients with focus on Sydney, Melbourne, and Brisbane metro.

* Disclaimer: rates and LVR are subject to change depending on risk. T&C's apply.

Where To From Here?

Speak to a specialist about private lending

You've considered your options, and decided private lending might be right for you, or maybe you have more questions. The next step is to get in touch with us. Don't worry, this won't appear on your credit report.


David R. Sutantyo

Managing Director

0413 505 402

  • What is the definition of private lending / private lender?
    Private lenders are typically high net-worth individuals who are seeking better returns on their investments by lending to businesses either directly or via a pooled mortgage funds (syndication). The lending is commonly secured against real-estate assets with loan terms from 3 months to 3 years.
  • How does private lending / private lender work?
    Loans from private lenders work just like any other type of loans. The funding is secured against real-estate assets to allow you to purchase properties, develop or construct new buildings, assist with your business' cash flow, pay invoices, etc. You may choose to make repayments in instalments or lump sum by the end of the term. The only difference with loans from banks or credit union is that the funds come from private investors and not members. This allows settlement to be fast tracked as the decisions are based on the individual's risk appetite.
  • What are private lending rates like? How much do private lenders charge?
    Private lending rates are typically higher than traditional lenders. It could range from as low as 4.99% to over 20% per annum. Rates are commonly interest-only where borrowers can choose to pay in instalments or pre-paid for the life of the loan.
  • Is private lending legal?
    Yes! It's perfectly normal to feel sceptical for something that is not "traditional" or sometimes misunderstood. Private lending is regulated by Australian government, and depending on the type of lending or investment services they provide, different lenders could carry different licences. Always do your research and ask questions before deciding that any financial product might be right for you.
  • What is peer-to-peer lending?
    Peer-to-peer (P2P) lending matches people looking to invest and people looking for loans. This allows individuals or businesses borrow money from an investor instead of going through a bank or credit union. When you're investing via a P2P platform, you're buying a financial product, this is typically a managed fund.
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