Australia’s most experienced investors, holding property through companies and trusts, are hitting a wall, and it has nothing to do with the quality of their portfolios. It is arithmetic. Bank serviceability models cap lending against declared income, and investors who hold assets in companies, trusts and self-managed super funds, drawing income lean for tax efficiency, eventually outgrow what those models will support. The portfolio keeps performing. The borrowing capacity, on paper, goes backward.
The structures behind that mismatch are now enormous. Self-managed super funds alone numbered 680,301 at the end of June and held an estimated A$1.107 trillion in assets, according to the Australian Taxation Office, with average assets of A$1.7 million per fund in 2024-25. Companies showed the largest net growth of any business structure in the year to June 30, rising 5.2% to 1,271,197, the Australian Bureau of Statistics reported. And the rules shifted again on August 10, when new SMSF borrowing under limited recourse arrangements was restricted to business real property, the ATO confirmed, leaving commercial premises as the main route to geared property inside super.
“Our clients are not sub-prime. They are successful people the banks have simply outgrown serving,” says Hadley Shapiro, founder of Sydney private lender Alphacon Capital.
The model wants a payslip and gets a balance sheet
The mismatch is structural. A sophisticated investor’s position is usually spread across entities: assets in trusts for protection and succession, trading income in companies, retirement savings ring-fenced in an SMSF. Each structure exists for a sound reason, and each one makes the investor harder for a bank’s assessment engine to read. The result is a class of borrower with more real wealth than the model can see, declined by institutions that would approve a fraction of the exposure for a salaried employee.
The pragmatic response is to stop restructuring one’s affairs to satisfy a lending template and use private business credit for the transactions banks cannot process at speed, accepting a rate premium as the cost of access and agility.
For an investor whose opportunity returns well above the cost of capital, the premium over a bank rate matters far less than certainty and timing. A 24-hour indicative answer against an eight-week committee cycle is not a convenience on a competitive transaction. It is the difference between securing the asset and reading about it. And because the borrowing entity is a company or corporate trustee transacting for business purposes, terms can be built around the deal.
The refinance is designed on day one
Alphacon serves exactly this borrower: business-purpose lending to companies and corporate trustees, secured against property and structured for the entity that holds the asset. Its product list includes loans to SMSFs buying business real property. Every facility is designed with a path back to mainstream finance once the transaction settles.
That last part is what most borrowers do not expect a private lender to say out loud.
“We are not trying to keep anyone on our book forever,” Shapiro says. “The structure is the point. Correct entity, correct security, correct exit. We are the bridge back to the bank, and we say that out loud.”
In practice the refinance plan is drawn up at origination, not discovered at maturity. The borrower’s position is documented through the term so that when the transaction is complete and the income presents cleanly, a mainstream lender can read the file and take it on. The private loan is priced as a season, not a sentence.
The typical sequence is short. An investor’s company finds an asset its bank would happily hold but cannot settle in time. The private facility secures the purchase through the correct entity, the transaction completes, the position stabilizes, and the file moves to a mainstream lender at mainstream pricing. Modeled that way, private credit is a transaction cost on acquisition and an allocation decision, not an act of desperation.
The bridge only works if the bank is waiting
The model carries a dependency that the pitch tends to underplay. Getting back to the bank requires a bank that wants the file, and the conditions for that refinance have worsened through 2026. The Reserve Bank of Australia lifted the cash rate to 4.60% on September 29, its fourth increase of the year, which raises the serviceability hurdle the borrower must clear on the way out. Cotality reports national dwelling values 5.2% below their March peak, so the security supporting a refinance may be worth less at maturity than at settlement. The new SMSF rules add a trap of their own: under ATO guidance, property bought with a new limited recourse loan must remain business real property for the life of the loan.
None of that undoes the core argument, which is candid by the standards of a market not always known for candor. Private credit in Australia is maturing, and the lenders that last are unlikely to be the ones promising to replace the banks. They will be the ones that know precisely where the banks end, and can walk their borrowers back across before the term runs out.
