The common qualifying tests
The most frequently used routes are: an accountant's certificate confirming net assets of at least $2.5 million, or gross income of at least $250,000 per year for each of the last two financial years; an investment of $500,000 or more in the relevant product; and the professional investor category, which includes AFS licensees, APRA-regulated bodies, and entities controlling at least $10 million in gross assets.
Certificates issued by a qualified accountant are generally treated as valid for two years and must be current at the time of the offer.
Why private credit offers are wholesale-only
Offering an investment to retail investors triggers a product disclosure statement, design and distribution obligations and other retail protections. Wholesale offers are exempt from those requirements, on the basis that these investors have the resources and experience to assess the risk and obtain their own advice.
That is why private credit opportunities are not advertised with returns to the general public and why eligibility is verified before any offer material is provided.
What being wholesale means for you
Fewer statutory protections. No product disclosure statement. Limited access to retail dispute resolution. You are relying on your own diligence, your advisers, and the quality of the arranger's underwriting.
Practical diligence questions: who holds the security and in what name; what is the LVR and on whose valuation; what is the loan term and exit; how are defaults handled and who bears recovery costs; how are fees disclosed; what is the manager's track record including loans that went wrong.
Key points
- Tests: $2.5M net assets, $250k income for two years, or a $500k investment.
- Accountant's certificates are generally valid for two years.
- Wholesale offers carry no PDS and fewer statutory protections.
- Eligibility must be confirmed before any offer material is provided.
Frequently asked questions
Can my SMSF invest in private credit?
Only if it meets the wholesale or sophisticated tests and the investment is permitted by its trust deed and investment strategy. Obtain your own advice.
How do I get a sophisticated investor certificate?
A qualified accountant issues it after reviewing your net assets or income position. It is generally valid for two years.
Does being wholesale mean I get better returns?
It means you can access wholesale offers. Returns depend entirely on the transactions, and they are not guaranteed.