Private Lender vs Bank
Understanding when traditional bank finance or private lending is the right choice for your business.
Choosing between a bank and a private lender isn't about which is "better" – it's about which is right for your specific situation. Both have distinct advantages depending on your timeline, credit profile, and financing needs.
As specialists in both bank and non-bank lending, we help Australian businesses navigate these options to find the optimal solution.
Side-by-Side Comparison
| Category | Bank | Private Lender |
|---|---|---|
| Approval Speed | 2-6 weeks | 24-72 hours |
| Credit Requirements | Strict criteria | Flexible assessment |
| Documentation | Extensive | Streamlined |
| Interest Rates | Lower (5-8%) | Higher (8-15%+) |
| Loan Terms | 5-30 years | 3-24 months |
| Security Options | Property only | Multiple options |
| Complex Situations | Limited flexibility | Case-by-case |
- You have strong financials and credit history
- Time is not critical (can wait 4-6 weeks)
- You need long-term finance (5+ years)
- You want the lowest possible interest rate
- Your situation is straightforward with clear income
- You have substantial documentation readily available
- You need funds quickly (within days)
- Bank has declined or will take too long
- Your situation is complex or non-standard
- You need short-term bridging finance
- Credit history has some blemishes
- You need flexibility in security or terms
Common Scenarios
Real situations where private lending provides the solution when banks can't help.
Auction Purchase
You've won an auction and need to settle in 30 days. Banks typically need 4-6 weeks minimum.
Solution: Private bridging loan settles in 5-7 days.
Development Site
You're buying a development site but don't have DA approval yet. Banks won't lend without it.
Solution: Private lender provides acquisition funding pre-DA.
Business Turnaround
Your business had a tough year but is now profitable. Banks see the history, not the turnaround.
Solution: Private lender assesses current position and security.
The Bottom Line
Private lending isn't a last resort – it's often the smartest choice when speed and flexibility matter. Many successful property developers and businesses use private finance strategically, even when they could qualify for bank finance, because the opportunity cost of waiting outweighs the interest rate difference.
The key is understanding when each option makes sense. That's where we help – by assessing your situation and recommending the right path forward.
Not Sure Which Option is Right for You?
Our team can assess your situation and recommend the best financing approach – whether that's bank, non-bank, or private lending.