Private mortgages for business

There’s a gap in Australian lending that catches a lot of good businesses. Banks want two years of tax returns, clean credit and plenty of time. Many owners have strong assets but one of those three is missing: the returns are late, there’s an old default, or the deadline is next Friday. Private mortgages exist to fill that gap.

Where private lenders get their money

A private lender is anyone lending outside the banking system. Some are funds that pool money from investors. Some are family offices or experienced individuals. Others are non-bank lenders with their own funding lines. What they have in common is that they lend against property and make their own credit decisions, without the rigid scoring a bank uses.

That independence is what makes them quicker and more flexible. It’s also why you need to deal with someone who knows which private lenders are reputable, what each one likes to fund and how they behave if something goes wrong.

How a private lender decides

Instead of starting with your tax returns, a private lender usually starts with three questions:

1. What’s the property worth, and what’s already owed on it? This sets the loan-to-value ratio, the share of the property’s value that will be borrowed in total.
2. Who owns it and can they all sign? Every registered owner has to be part of the loan, as borrower or guarantor.
3. How will this loan be repaid? A refinance to a bank, a property sale, a business sale, a known contract payment or steady income.

Credit history and trading still matter, but they’re read as part of the story rather than as a pass or fail test. A business that had a rough patch in 2024 and has a clear plan in 2026 can be a good private lending client.

First or second position

A private mortgage can sit in either position:

Position	When it’s used	What to know
First mortgage	No existing loan, or the private loan pays out the existing one	Usually lower cost than second position
Second mortgage	You keep your current home loan	Lender relies on equity above the first loan

If you already have a good home loan, a second mortgage keeps it intact. If the existing loan is in arrears or the bank won’t extend it, a private first mortgage can clear it and give you breathing room. For longer, cheaper money once things settle, a standard first mortgage business loan is often the exit.

Typical uses we see

• Paying out an ATO debt or entering a payment arrangement from a position of strength.
• Buying stock or equipment for a contract the business has already won.
• Clearing expensive short-term debts that are draining daily cash flow.
• Funding the deposit or full price of a business purchase.
• Bridging to a sale when a property won’t settle for months.
• Getting a business through a turnaround while the books are brought up to date.

An illustrative example

A Townsville marine services company has two years of unlodged tax returns after its bookkeeper left, and its bank won’t consider a loan until they’re done. It needs $420,000 to buy out a retiring partner, who wants to settle within a fortnight. The remaining owner has a commercial workshop worth about $1.4 million with no debt. A private first mortgage over the workshop, for 15 months, funds the buyout. The accountant lodges the returns over the following months, and the plan is to refinance to a bank once they’re assessed. Illustrative only.

Costs and terms

Private mortgages typically include an establishment fee, valuation and legal costs, and interest that may be paid monthly or prepaid for part of the term. Some charge a discharge fee. Ask for every cost in a single written summary and look at the total you’ll repay, not just the headline figure. Check whether you can repay early without a penalty, because the whole point of a private loan is usually to get out of it once the problem is solved.

Questions to ask any private lender

• Who is the lender, and how long has it been lending?
• Is the interest paid monthly, capitalised or prepaid?
• What happens if my exit is delayed by a month or two?
• Is there a penalty for repaying early?
• Which law firm acts for the lender, and can I get the documents early to review?

Talk to someone who knows the private market

Send us a short enquiry with the property, what’s owing and what you need. No credit check happens at the enquiry stage, we don’t scatter your details across the market, and an experienced person reads your file and calls you. Give us the honest picture, credit marks and late returns included, and we’ll tell you straight away whether a private mortgage can work. Start here.