The Rise of Private Credit: Why You Need a Commercial Finance Broker

Summary: Australia’s regulatory tightening has created a significant commercial finance gap, which is being filled by the rapid growth of private credit and non-bank lending. Securing the right commercial finance solution requires the expertise of a specialist commercial finance broker or commercial financing broker. These professionals offer flexible, bespoke funding options, including development and bridging finance, which are often unavailable through traditional banks.

The Market Imperative

Australia’s commercial finance landscape is rapidly transforming. Ongoing regulatory tightening and risk aversion by traditional banks, a persistent trend since the GFC and Banking Royal Commission, have created a significant funding gap. As a result, securing the right commercial finance solution has become indispensable for businesses. This gap is now being rapidly filled by the private and non-bank lending sector, which provides flexibility and speed standard lenders lack.

Selectabroker plays a critical role providing specialist solution architects. As complex commercial loans increasingly fall outside standard bank appetites, brokers are indispensable for securing funding for SMEs, developers, and agribusinesses.

The Commercial Finance Landscape: Growth and Scrutiny

Rapid Growth in Specialist Lending

There has been rapid growth as reflected by the data:

• Broker Specialisation: The proportion of mortgage brokers writing commercial loans increased from 28.45% to 30.66% between October 2023 and March 2024.
• Sector Expansion: Private credit, while small at 2.5% of overall business lending, is growing faster than other business debt, outpacing broader business lending by two percentage points in 2024.

This expansion is driven by strong demand for commercial finance solutions, including non-conforming loans and bridging finance.

 The Regulatory Environment

The rise of private lending, often operating under lighter regulatory frameworks, has increased ASIC scrutiny. Private lenders—which range from high-net-worth individuals to boutique funds—differ from institutional non-bank lenders that are formally regulated . Lending in this space is not a free for all. ASIC has signalled ongoing compliance and enforcement activity in this space – Oak Capital was charged with unconscionable conduct that severely curtailed their operations.

Selectabroker prioritises:

• Applying rigorous due diligence.
• Ensuring the suitability of all recommendations.

The Specialist Commercial Financing Broker Advantage: Beyond the Bank Menu

A commercial financing broker’s value is rooted in specialisation, providing solutions that maybe beyond the scope of a client’s incumbent bank.

Commercial Solutions

Specialist brokers access a deep panel of private funding options across the commercial spectrum:

• Commercial Property Loans: Securing finance for office, retail, or industrial spaces, typically navigating LVR requirements of 60–70%.
• Development Finance: Structuring construction finance for subdivisions, commercial projects, or mixed-use developments, which requires expert knowledge of progress payments and exit strategies. Banks are often too slow in this space.
• Equipment and Asset Finance: Providing flexible solutions for acquiring or releasing equity against machinery, vehicles, or full fleets, with terms aligned to the asset’s useful life.
• Bridging Finance: Offering short-term solutions (typically 6–12 months) for funding gaps, such as purchasing a property before selling an existing one.

Niche and Complex Solutions

Specialist expertise is paramount in complex, high-value, or time-sensitive scenarios:

• SMSF Lending: Requires expertise in structuring loans to comply with both banking and superannuation regulations, such as acquiring commercial property within a Self-Managed Super Fund. Non-bank lenders can offer up to 75% LVR for commercial SMSF loans.
• Jumbo Transactions: Designed for larger requirements ($5 million to $25 million) for commercial property purchases or refinancing large facilities. Features can include Low Doc solutions up to 80% LVR and same-day approvals for urgent refinances.
• Time-Sensitive/Equity Release: Non-bank providers specialize in short-term, fully capitalized business loans via equity release to circumvent standard lender declines based on factors like client age or rural property location.

Agribusiness and Rural Specialisation

Specialist brokers offer bespoke solutions for the agricultural sector, which often involves high volatility and specific asset requirements:

• Specialised Products: Funders offer products like Term Finance for farmland although LVRs are lower in these circumstances. Seasonal Finance can be provided for Livestock & Crops 
• Rigorous Due Diligence: Funding specialised assets, like a poultry farm refinance, requires brokers to manage significant complexity. Lenders required extensive information including the client’s specific experience, farm performance metrics, compliance with RSPCA standards etc. Selectabroker ensures the clients are in a better position an the completion of the loan term.

Partnering for Profitability: Why a Specialist Commercial Finance Broker is Indispensable

The current economic climate mandates a strategic shift in capital access. By leveraging the flexibility and expertise of specialist commercial finance brokers, clients access a diverse panel of non-bank and private funding solutions. For complex requirements – including commercial SMSF acquisition, development finance, rural refinancing, and specialised asset purchases, Selectabroker is the indispensable guide, structuring successful deals where traditional banking models maybe constrained.