Private lending is rapidly becoming a major force in Australia’s financial services sector, with brokers playing a pivotal role in connecting clients to credit amid tightening bank criteria.
Fuelled by demand from SMEs seeking flexible funding solutions and investors looking for diversification, the private lending market continues to expand. Brokers are increasingly turning to these options to close funding gaps, especially for clients who fall outside traditional credit policy.
“Brokers are leveraging private lending solutions to address specific client needs, such as non-conforming loans or funding gaps for property transactions,” said MFAA CEO Anja Pannek (pictured).
“As traditional lenders pull back due to regulatory and economic pressures, demand for credit hasn’t gone away – and that’s where the flexibility of private lending is proving its value.”
Private credit in Australia is now estimated at around $40 billion, accounting for approximately 2.5% of total business debt, according to the Reserve Bank. While still a small share of the overall market, the sector has expanded rapidly – with growth outpacing broader business lending by around two percentage points in recent years.
While private lending offers brokers and borrowers greater flexibility, it also comes with increased complexity and risk. The sector operates under lighter regulatory obligations, prompting heightened oversight from the Australian Securities and Investments Commission (ASIC).
In February, ASIC released a discussion paper on the evolving dynamics between public and private capital markets, noting the growing presence and risks associated with private credit. This followed earlier enforcement action against a private lender for circumventing lending laws, a move signaling greater regulatory focus.
“Do your due diligence, clearly understand what the lender is offering and whether it’s suitable for your client’s circumstances over the long term,” Pannek said.
Brokers are not just expanding into private credit – they’re also increasing their presence in commercial lending.
According to the MFAA’s Industry Intelligence Service (18th edition), the proportion of brokers writing commercial loans grew from 28.45% to 30.66% between October 2023 and March 2024. The number of brokers involved in commercial lending rose over 15% to 6,755 in the same period.
The MFAA and Deloitte’s 2025 Value of Mortgage and Finance Broking report found that 13% of brokers now write at least a quarter of their volume in commercial deals. Major aggregators have reported more than 20% year-on-year growth in commercial broking.
Private lenders are stepping in where banks have grown increasingly cautious post-GFC and post-Royal Commission.
“Following the GFC and the Banking Royal Commission, banks became subject to stricter capital adequacy requirements and more conservative lending practices,” said Clare George, LMG associate director commercial and MFAA National Equipment and Commercial Finance (ENCF) Forum member.
“Private credit providers have stepped in, offering tailored loan structures, flexible repayment terms, and faster execution times.”
There’s often confusion around terminology in the non-bank and private lending space.
Jean-Pierre Gortan, managing director of Simplicity Loans & Advisory and MFAA ENCF Forum member, drew a clear distinction.
“Non-bank lenders are institutional in nature,” Gortan said. “They’re regulated, have formal credit policies, and often resemble banks in their operations. Private lenders, on the other hand, can range from high-net-worth individuals to boutique funds. They are less regulated, more nimble and often priced for risk. That flexibility is an advantage, but it demands more caution.”
George added a legal clarification.
“Private lenders don’t always hold an Australian Credit Licence (ACL) and may not be bound by the National Consumer Credit Protection (NCCP) Act when the loan is structured as business credit,” he said. “Brokers need to understand the true nature and purpose of the loan – not just the legal structure.”
With a broader mix of lenders entering the market, broker responsibility is growing. Transparency and fair conduct are still variable across the sector.
“Private credit plays a critical role in supporting Australian businesses and property sectors, but not all lenders operate to the same standards,” said George Obeid, president of the MFAA National ENCF Forum and chief third-party officer at Judo Bank. “We welcome the increased diligence ASIC is applying – it benefits everyone.”
“We’re seeing issues like hidden fees, vague documentation, and questionable post-settlement behaviour,” Gortan said. “This isn’t happening in the main. With growth accelerating in this sector; it’s about brokers being aware of things to watch out for so they and their clients can engage with confidence.”
To support safe growth in private lending, the MFAA National Equipment and Commercial Finance Forum advises brokers to:
“Education is key. Brokers must go beyond the surface, ask the right questions, and never assume a loan structured as business credit removes consumer protections,” George said. “ASIC’s focus is increasing, and brokers should expect more oversight. The best way to prepare is to hold yourself to the highest standard.”
