Is Private Lending Right for Your Gold Coast Business? Scenarios, Costs and Exit Plans

A Gold Coast builder finds a commercial shed at a price that won't last the week. The bank quotes eight weeks for credit approval. The vendor wants settlement in 30 days. That gap between how fast an opportunity moves and how fast a bank can respond is where private lending earns its place.

Private lending isn't right for every business or every deal. It usually costs more than bank finance, and it works best when the deal is short, the security is solid and the way out is clear. This guide won't repeat the basics, because our introduction to private lending for Gold Coast businesses already covers those. Instead, it gives you a practical way to test whether a private loan suits your situation: four questions, five scenarios and a checklist to run through before you commit.

The Short Answer

Private lending tends to make sense when you need speed or flexibility, you can offer good security, the loan is short term and the numbers still work after paying the higher cost. If any one of those is missing, it's worth asking whether a different structure, such as asset finance or cash flow lending, could do the job for less.

The Four-Question Test

Before you approach a private lender, work through these questions honestly.

1. Is the funding genuinely short term? Private loans are typically measured in months, not years. If you need money for five years, a longer-term facility will almost always be cheaper.

2. Is the security strong? Private lenders lean heavily on the asset behind the loan. If you can offer property with healthy equity, or another qualifying asset, you're in a much stronger position.

3. Is the exit real? An exit strategy is how the loan gets repaid: a sale, a refinance or a known cash event. "The business will pick up" isn't an exit.

4. Do the numbers still work after costs? If the cost of the funding eats most of the profit on the deal, the speed isn't worth paying for.

Four yes answers point towards private lending. One or two no answers don't rule it out, but they're a signal to pause and look at alternatives.

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Five Scenarios Where Private Lending Can Make Sense

These are illustrative examples, not client stories, but they reflect the kinds of situations that commonly come up for Gold Coast owners.

1. Buying before you sell. An owner finds the right commercial premises, but their current property hasn't sold yet. A short-term loan bridges the gap to settlement and is repaid when the sale completes. The exit is the sale, so the key risk is timing: what happens if the sale takes longer than expected?

2. Starting a project while the bank finishes its assessment. A small builder or developer has approvals and a costed project, but needs land settled or early works funded now. Private funding can cover the early stage before the project moves to a construction or development facility. Our guide to property development finance and our SEQ development finance overview explain how that handover works.

3. A time-limited purchase. A discounted parcel of stock, a business acquisition or a plant sale with a hard deadline can be worth funding quickly. If the purchase is equipment, compare it against asset finance or heavy equipment finance first, because those are often cheaper. Private funding comes into play when the timeline is too tight or the asset doesn't suit standard finance.

4. A sound business with thin paperwork. A newer owner-operator may have strong security but limited trading history or outstanding tax lodgements. Banks often decline on policy alone, while a private lender can weigh the security and the deal. If this sounds familiar, our explanation of commercial low doc loans and our start-up business loans page cover related options. The exit is usually a refinance once your financials have caught up.

5. Restructuring or clearing a pressing debt. A business with several entities, a recent restructure or a debt that's growing through penalties may have equity in property that can be used to clear it. The plan is to refinance into cheaper funding once things are settled. This is a situation for complex business finance advice alongside your accountant, not a decision to make in a hurry.

Where Private Lending Usually Isn't the Answer

• Ongoing working capital. If you're borrowing to cover regular shortfalls, that's a cash flow pattern, and cash flow lending is built for it. Rolling over short-term private loans compounds the cost.
• Equipment with a long working life. Spreading the cost over the life of the asset through equipment finance is usually far cheaper than a short-term private loan.
• Deals with no exit. If repayment depends on hope rather than a plan, pause before signing.
• Thin-margin deals. If the finance cost takes most of the profit, the deal doesn't need a private loan, it needs a rethink.

What Private Lenders Look At: Security

Private lenders assess the asset behind the loan more closely than a bank scorecard would.

For property, they'll look at the value, any existing debt and the loan-to-value ratio (LVR), which is the loan amount as a percentage of the property's value. A lower LVR generally means more favourable terms. Lenders often order an independent valuation, and that cost is commonly passed on to the borrower.

For equipment and other business assets, lenders usually record their interest on the Personal Property Securities Register. The PPSR is the official government register of security interests in personal property, and the public can search it. That's useful for you as a buyer too, because you can check whether a piece of equipment already has a security interest registered against it before you purchase.

Planning the Exit

A strong exit plan is the difference between private lending working smoothly and becoming expensive. The three most common exits are:

• A sale, such as an existing property or asset settling
• A refinance, moving to a lower-cost facility once the business or project qualifies
• A known cash event, such as progress payments or a settlement that's contractually locked in

Then stress-test it. Ask yourself what happens if the exit takes three months longer than planned. Check whether the loan term can be extended and what an extension would cost. Build a buffer into your timeline rather than planning to the last day.

Understanding the Real Cost

Rates and fees vary between lenders and deals, so we won't quote a single figure here. What matters is the total cost measured against what the funding unlocks. Ask for all of these in writing:

• The interest rate, and whether interest is paid monthly or added to the loan
• Establishment fees
• Valuation and legal fees
• Any broker fees
• Early repayment or exit fees
• Extension fees and default interest rates

A hypothetical example. Say a business needs six months of funding to secure a purchase, and the total cost of the funds (interest and all fees) comes to $24,000. If the purchase is expected to generate $90,000 in net profit, $66,000 remains and the deal stacks up. If the exit slips by three months and the cost rises to $36,000, $54,000 remains, so the deal still works but with less margin. If the same purchase would only return $30,000, the finance would consume most of the profit, and private lending is hard to justify. Run this kind of calculation, including a delayed scenario, before you proceed.

On tax, interest and some borrowing costs on money used for business purposes may be deductible, but it depends on how the funds are used and how the loan is structured. The ATO's business deductions guidance is a sensible starting point, and your accountant should confirm your position before you rely on any deduction.

What to Have Ready

Preparation speeds everything up. Before you speak to a broker, gather:

• Details of the security you're offering and your estimate of its value
• Statements for any existing loans secured against it
• Your entity structure (company, trust or personal names) and ID for directors or trustees
• Whatever financial information you have, such as bank statements, BAS or tax returns
• The contract of sale or purchase quote, if there is one
• A written exit strategy with realistic dates
• Contact details for your accountant and solicitor

Red Flags to Watch For

• No written figure for the total cost of the loan
• Pressure to sign before you've had independent legal and accounting advice
• Large upfront fees before you have a written offer or clear terms
• Vague answers about what happens if your exit is delayed
• A broker or lender who can't show their credit licence details or dispute resolution membership (look for a recognised industry body and membership of the Australian Financial Complaints Authority)

This article focuses on business-purpose lending. Loans for personal or household purposes carry different consumer protections, so always tell your broker exactly what the funds will be used for.

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Frequently Asked Questions

How quickly can a private loan settle?
Often faster than a bank, but the timeline depends on the security, the valuation and the legal documents, not only the lender's appetite. Getting your paperwork ready early is the best way to save time.

Can I get a private business loan with a poor credit history?
Private lenders weigh the security and the exit strategy heavily, so some will consider applicants with credit issues. Expect pricing to reflect the additional risk. Our guide on how lenders assess bad credit business loan applications explains more.

Is private lending only secured by property?
Property is the most common security, but other qualifying assets may be considered depending on the lender and the deal. A broker can tell you what's realistic for your situation.

Do I need a broker to access private lenders?
It isn't compulsory, but private lending is a network of individual lenders and funds with different appetites. A broker with established relationships can match your deal to the right lender, which affects both approval and pricing.

Talk to Millard Financial About Your Options

If you're weighing up a private loan, we'll look at your security, your exit and the numbers, then tell you honestly whether private lending is the right fit or whether a cheaper option exists. Explore our private lending solutions, get in touch online or call 0403 945 148.

This article is general information only and does not take into account your objectives, financial situation or needs. Rates, fees and lender criteria vary and can change. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.

Related reading:

• Private Lending Solutions
• Private Lending Explained: When It Makes Sense for Gold Coast Businesses
• Second Mortgage vs Refinancing Explained
• Why Use a Commercial Finance Broker for Your Business?

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