Solutions
Business loans with a credit event or without full financials
Private lenders underwrite the security and the exit first. A paid default on the director’s file, a company that is behind on a facility, or financial statements that won’t exist for another quarter are all factors — but they are not the decision. Here is what still gets a deal done, and what doesn’t.
What “asset-based” actually means
A bank asks whether the borrower can service the loan from income, and reads the credit file as evidence either way. A private lender asks whether the security would clear the debt if the exit failed, and whether the exit is credible. That shifts the weight from history to collateral. It does not make history irrelevant — it changes which funder is approached, how the loan-to-value ratio is set and what the pricing looks like.
Credit events in context
- A paid or small default on a director's personal file is usually a pricing point, not a decline, when the entity's property security is sound.
- Arrears on an existing facility are workable when the private loan clears them and the exit is a refinance on a clean file — less so when the arrears are the reason the exit is doubtful.
- An ATO debt is one of the most common purposes we fund. See clearing ATO tax debt.
- A discharged bankruptcy of a director some years back can be acceptable to parts of the panel; a current bankruptcy or an undischarged director is not.
- Litigation or enforcement on foot against the entity or the security property has to be disclosed and usually has to be resolved by the loan itself.
No financials, low financials
Indicative terms on a private first or second mortgage rarely need financial statements. What the lender wants is the property, the encumbrances, the purpose and the exit. Where statements are stale or the entity is newly formed, bank statements, BAS lodgements and a letter from the accountant usually suffice for formal offer. An interest-capitalised structure removes the serviceability question entirely for the term of the loan.
How risk is priced in
Rather than declining, a private lender trims the LVR — a deal that would run to 75% on a clean file may be offered at a lower ratio — and prices the facility for its risk. We do not publish rates because they are set per deal; indicative pricing is in the term sheet before any commitment. What we will not do is dress a weak deal up: if the exit does not stand up, we say so.
What does rule a deal out
- An individual borrower, or a loan over an owner-occupied home.
- No real property security, or security the lender cannot register a mortgage over.
- A purpose that is personal, or a structure that looks designed to disguise a consumer loan.
- No identifiable exit.
The products behind it
First Mortgage Loans
Registered first mortgage over residential investment, commercial, industrial, rural or mixed-use property.
MoreSecond Mortgage Loans
Sit behind a major-bank or other priority lender. Raise capital without disturbing an existing first.
MoreFrequently asked questions
- Do private lenders check credit?
- Yes. Credit files on the entity and its directors are reviewed, along with searches on the property and the company. The difference is how the results are weighed: security and exit carry more weight than history.
- Is approval guaranteed if I have property?
- No, and be wary of anyone who says it is. Every loan is assessed on the security, the LVR, the purpose and the exit. Property makes a loan possible; it does not make it automatic.
- Do I need financial statements?
- Usually not for indicative terms. Formal offer typically needs bank statements and BAS lodgements rather than audited accounts, particularly where interest is capitalised and the loan is not serviced from income.
- Will a loan like this help the bank say yes later?
- Often that is the point: clear the arrears or the ATO, trade cleanly for a period, then refinance to a bank. We structure the term with that exit in view.
Related reading
Important — Business Purpose Lending Only
IMPORTANT — BUSINESS PURPOSE LENDING ONLY. Andorra Capital Solutions Pty Ltd (ACN 675 464 623 / ABN 32 675 464 623) is a commercial finance broker and introducer. We arrange property-secured business-purpose loans between Australian corporate borrowers and a panel of non-bank lenders and private investors. We do not provide credit ourselves. We do not arrange consumer credit and we do not arrange credit regulated by the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act) or the National Credit Code. We are not an Australian Credit Licensee. Every loan arranged through us is either to a borrower that is not a natural person (outside the National Credit Code under section 5(1)) or for purposes that are wholly or predominantly business or investment purposes (outside under section 6(1)), or both. All borrowers are required to execute a Business Purpose Declaration and to evidence the true business purpose of the funds. No part of any loan arranged through us may be applied for personal, domestic or household purposes. If a borrower applies any part of the funds for a purpose to which the NCCP Act would apply, the borrower does so in breach of the loan agreement and indemnifies the lender against any resulting loss, claim or cost. The information on this website is general in nature, does not constitute financial, legal or taxation advice, and does not take into account your objectives, financial situation or needs. No interest rates, fees or other commercial terms are advertised on this website; pricing is determined by the relevant panel lender or private investor and is disclosed to the borrower as part of indicative terms. All loans are subject to credit assessment, satisfactory security, valuation, and execution of formal loan documentation by the relevant lender. For consumer credit (regulated under the NCCP Act), contact a licensed credit provider.