Private Credit and ASIC Oversight in Australia 2026: What SME Borrowers Must Know

Australia's private credit market has grown dramatically in recent years, with non-bank lenders now providing billions of dollars in financing to small and medium-sized businesses that may not qualify for — or choose not to pursue — traditional bank lending. But as the market expands, so does regulatory scrutiny. In 2026, ASIC is intensifying its oversight of private credit practices, and SME borrowers need to understand what this means for the financing options available to them.

Understanding Private Credit in Australia

Private credit refers to lending provided by non-bank institutions — including private debt funds, fintech lenders, family offices, and specialist finance companies — outside the traditional banking system. For Australian SMEs, private credit encompasses a wide range of products: unsecured business loans, invoice finance, asset-backed lending, mezzanine finance, and direct lending facilities.

The appeal of private credit for SMEs is straightforward. Non-bank lenders typically offer faster approval times, more flexible credit criteria, and greater willingness to lend against non-traditional assets or cash flow profiles than the major banks. For businesses that have been declined by their bank, or that need capital faster than a bank's credit process allows, private credit can be a critical lifeline.

However, private credit products are not all created equal. Interest rates, fees, security requirements, and covenant structures vary enormously across lenders. Without expert guidance, SME borrowers can find themselves locked into facilities that are poorly suited to their needs — or that carry hidden costs that significantly increase the effective cost of capital.

ASIC's Intensifying Oversight of Private Credit

ASIC has signalled clearly that private credit is a priority area for regulatory attention in 2026. The regulator's concerns centre on transparency, valuation practices, conflict management, and the adequacy of disclosure to borrowers — particularly in the context of rapidly growing non-bank lending volumes.

ASIC's ongoing work on private credit practices is raising expectations regarding how alternative lenders operate. Specifically, ASIC is focused on ensuring that non-bank lenders maintain "credit-grade" operations — including rigorous licensing, robust monitoring systems, transparent fee disclosure, and access to the Australian Financial Complaints Authority (AFCA) for dispute resolution.

For SME borrowers, this regulatory shift has practical implications. Lenders that cannot demonstrate compliance with ASIC's evolving expectations may face enforcement action, licence conditions, or market exit — leaving borrowers with disrupted facilities. Choosing a lender with strong governance and ASIC compliance credentials is therefore not just a matter of best practice; it is a risk management imperative.

The Role of a Finance Broker in the Private Credit Market

Navigating the private credit market without professional guidance is genuinely difficult. The landscape includes hundreds of lenders, each with different credit appetites, pricing models, and product structures. A qualified finance broker brings several critical capabilities to this process.

• Lender panel access — Experienced finance brokers maintain relationships with a broad panel of non-bank lenders, including specialist private credit providers that do not market directly to borrowers
• Credit assessment expertise — Brokers understand how different lenders assess credit risk and can position a borrower's application to maximise approval prospects and minimise pricing
• Product comparison — Brokers can compare the true cost of competing facilities — including establishment fees, ongoing fees, early repayment penalties, and covenant structures — on a like-for-like basis
• Regulatory compliance guidance — A licensed finance broker operating under an Australian Credit Licence (ACL) has legal obligations to act in the borrower's interests and provide compliant credit assistance
• Negotiation leverage — Brokers with strong lender relationships can negotiate pricing, security requirements, and covenant terms that individual borrowers cannot access directly
• Ongoing facility management — Beyond initial placement, brokers can assist with facility reviews, refinancing, and managing lender relationships as a business's needs evolve

Key Considerations When Accessing Private Credit

Before engaging with private credit lenders — directly or through a broker — SME borrowers should understand several important factors that will affect both the cost and suitability of any facility.

The effective interest rate on private credit facilities is often significantly higher than bank lending. While headline rates may appear competitive, the inclusion of establishment fees, line fees, and other charges can substantially increase the effective annual cost. Borrowers should always request a comparison rate or total cost of credit calculation before committing to any facility.

Security requirements vary widely. Some private credit lenders require a general security agreement (GSA) over all business assets, a personal guarantee from directors, or a mortgage over real property. Understanding the security implications of a facility — and the consequences of default — is essential before signing any credit agreement.

Covenant structures in private credit facilities can impose ongoing obligations on borrowers, such as maintaining minimum cash balances, restricting additional borrowing, or requiring regular financial reporting. Breaching a covenant can trigger default provisions even if repayments are current. A finance broker can help borrowers understand and negotiate covenant terms before execution.

Common Mistakes SME Borrowers Make

Several avoidable errors are common among SME borrowers accessing private credit for the first time.

• Focusing solely on approval speed — Fast approval is valuable, but not at the cost of unsuitable terms. Borrowers who prioritise speed over structure often find themselves in facilities that constrain their business operations
• Failing to compare multiple lenders — Accepting the first offer received, without benchmarking against alternatives, frequently results in paying more than necessary for capital
• Ignoring the exit provisions — Early repayment fees and break costs on private credit facilities can be substantial. Borrowers should understand the cost of exiting a facility before they need to
• Not verifying lender credentials — Not all private credit lenders hold an Australian Credit Licence. Borrowers should verify that any lender they engage with is appropriately licensed and has AFCA membership for dispute resolution
• Underestimating the impact on cash flow — Private credit repayments — particularly on short-term facilities — can place significant pressure on working capital. Borrowers should model repayment obligations against realistic cash flow projections before committing

Australian Regulatory Context

Finance brokers operating in Australia must hold an Australian Credit Licence (ACL) issued by ASIC, or operate as an authorised credit representative of an ACL holder. This licensing requirement applies to any entity that provides credit assistance — including recommending, assisting with, or arranging credit contracts — under the National Consumer Credit Protection Act 2009.

Licensed finance brokers are subject to ongoing conduct obligations, including the requirement to maintain adequate compliance systems, hold appropriate professional indemnity insurance, and ensure that responsible managers hold relevant qualifications. Brokers must also provide clients with a Credit Guide at the time of first contact, disclosing their licensing details, fee arrangements, and any commissions received from lenders.

The expansion of the Consumer Data Right (CDR) to non-bank lenders from mid-2026 is expected to further transform the private credit landscape. CDR-enabled data sharing allows lenders to access real-time bank transaction data — with borrower consent — enabling faster, more accurate credit assessments. Finance brokers who understand how to leverage CDR data in the application process will be able to secure better outcomes for their clients.

AFCA provides an important consumer protection mechanism for SME borrowers. If a dispute arises with a licensed lender or broker, AFCA can investigate complaints and award remedies — including compensation — at no cost to the complainant. Borrowers should always confirm that their lender and broker are AFCA members before proceeding.

Questions to Ask a Finance Broker About Private Credit

When engaging a finance broker to assist with private credit, the following questions will help you assess their expertise and suitability.

• Do you hold an Australian Credit Licence, and what is your licence number?
• How many non-bank and private credit lenders are on your panel?
• How do you disclose the commissions or fees you receive from lenders?
• Can you provide a comparison of the total cost of credit across multiple lenders, including all fees?
• What experience do you have with businesses in our industry and at our revenue level?
• How do you assess whether a private credit facility is appropriate for our cash flow profile?
• Are you a member of the Finance Brokers Association of Australia (FBAA) or the Mortgage and Finance Association of Australia (MFAA)?

How MyMoney® Can Help

The private credit market offers genuine opportunities for Australian SMEs — but accessing it effectively requires professional guidance from a licensed finance broker who understands both the lender landscape and the regulatory environment. MyMoney® makes it easy to find the right broker for your business.

MyMoney® connects Australian businesses with qualified, licensed finance brokers who have deep expertise in SME lending, private credit, and alternative finance. Whether you need working capital, equipment finance, or a structured debt facility, our marketplace helps you find a broker with the right lender relationships and the expertise to secure the best available terms.

Post a Brief to describe your financing requirements and receive tailored proposals from experienced finance brokers. Or Browse Finance Brokers to explore profiles and find a specialist with the right expertise for your business.