Speed of execution
A bank commercial application commonly takes four to twelve weeks from submission to settlement, longer where valuations, credit committees or lenders' mortgage insurance intervene. A private facility can move from deal snapshot to indicative terms within about a business day, and to settlement in one to three weeks once valuation and legal work are done.
Where a contract deadline, an auction, a caveat or an expiring facility drives the timetable, that difference is the whole reason private credit exists.
Documentation and assessment
Banks want two years of financials, tax portals, ATO clearance and serviceability that fits their model. Private lenders assess the asset, the equity position and the exit first, then the sponsor. Low-doc structures are normal where the exit is a sale or refinance rather than trading cash flow.
That does not mean no diligence. A private lender still verifies title, ownership, valuation, prior encumbrances, the borrowing entity and the credibility of the exit — it just does not require the loan to be repaid from taxable profit.
Term, flexibility and cost
Bank facilities run for years and amortise; private facilities run months and are repaid in a single event. Private structures can capitalise interest, fund progressively, sit behind an existing first mortgage, or be secured by a caveat — flexibility a bank product cannot deliver.
All of that costs more. The sensible framing is total cost over the actual months held, measured against the value of the outcome the facility makes possible.
How they work together
The most common pattern in commercial finance is private first, bank second. Private credit funds the acquisition, the bridge or the completion; the borrower then refinances into cheaper bank debt or sells the asset. Treating private credit as a bridge to a bank outcome — with the exit planned before settlement — is what keeps the cost proportionate.
Key points
- Banks: cheap, slow, policy-driven, long term.
- Private credit: fast, flexible, transaction-driven, short term, higher cost.
- Private facilities are usually a bridge to a sale or bank refinance.
- Plan the exit before you settle the private loan.
Frequently asked questions
Will a private loan hurt my chances of a future bank loan?
Not inherently. Banks focus on conduct and the current position. A private facility repaid on time, with a clear purpose, is generally viewed as ordinary commercial funding.
Can a private lender refinance my expired bank facility?
Frequently, yes — where there is adequate equity in the security and a realistic path back to bank debt or a sale.
Do private lenders check credit files?
Usually yes, but adverse credit is not automatically fatal where the security and exit are strong and the history is explained.