How to check a private lender before you sign

A good private lender can rescue a deal a bank would have let slip. A fake one can take your money and your personal details and disappear. Because private lenders operate outside the banking system and many business owners deal with one for the first time under pressure, it pays to spend half an hour checking who you’re dealing with before you send documents or sign anything.

The good news is that most of the checks are free, quick and done on official government registers. This guide walks you through them in order, explains what each result actually tells you, and lists the warning signs that should make you stop.

Your verification checklist at a glance

1. Search the lender’s ABN on ABN Lookup.
2. Search the company on ASIC’s company register and, if needed, buy an extract to see officeholders.
3. Check any licence number on ASIC’s Professional Registers.
4. Search the directors on ASIC’s banned and disqualified register.
5. Search the business and website on Moneysmart’s Investor Alert List.
6. Confirm the address, phone number and website match across independent sources.
7. Insist on a written Letter of Offer and solicitor-run settlement.

How do I check a lender’s ABN and company details?

Start with ABN Lookup, the free public search of the Australian Business Register. You can search by ABN, ACN or name. The result shows whether the ABN is active or cancelled, the type of entity, its GST status and, where available, historical trading names. A lender trading under a name that doesn’t appear anywhere on its ABN record, or whose ABN was cancelled, deserves hard questions.

Next, search the company on ASIC’s company and organisation registers. The free search shows the company name, type, ACN and ABN, the registration date, the suburb, state and postcode of the registered office, and the list of documents lodged. A current company extract, which costs a small fee, adds the company’s officeholders. Check two things in particular:

• Does the registration date fit the story? A company registered three months ago that claims years of lending experience doesn’t add up.
• Do the directors match the people you’re speaking to? If someone introduces themselves as a director, their name should be there.

ASIC’s own advice is worth keeping in mind: being listed on a government register does not guarantee a business is trustworthy. Registration proves existence, not good conduct.

Does a private business lender need an Australian credit licence?

This is where many borrowers get confused. Moneysmart describes an Australian credit licence as a licence given by ASIC that allows people or companies to engage in credit activities, and says ASIC’s Professional Registers Search will show whether a company or person holds one.

However, ASIC explains that the National Credit Code applies where the borrower is an individual or strata corporation and the credit is for personal, domestic or household purposes, or to buy or improve residential property for investment. Lending predominantly for business purposes falls outside that Code. So a genuine lender making only business-purpose loans may not hold a credit licence, and the absence of one is not, on its own, a red flag for a business loan.

What is a red flag:

• A lender that quotes a licence number which doesn’t match the register entry.
• A website address that isn’t the one listed against a licensee. ASIC notes that the Professional Registers show licensees’ website addresses and advises caution where a site claiming to belong to a licensee isn’t listed.
• A lender offering a consumer product, such as a home loan for personal use, while claiming it needs no licence.

Moneysmart also points out that holding a licence doesn’t mean ASIC endorses the licensee, so a licence is one check among several, not a seal of approval.

How do I check the people behind the lender?

ASIC keeps a banned and disqualified register that lets you search people disqualified or banned from roles in corporations, financial services or the credit industry. Run each director’s name from the company extract. It takes a minute and occasionally reveals exactly what you need to know.

Then search the business name and website on Moneysmart’s Investor Alert List, which flags companies, businesses and websites that may be fraudulent, scams or unlicensed. It is aimed mainly at investment offers, but it takes seconds to search and a match on any part of the lender’s details is reason enough to walk away.

What are the warning signs of a fake or risky lender?

Moneysmart warns that some scam websites impersonate real businesses, while others are entirely fake businesses with their own brands. Either way, the behaviour gives them away.

Warning sign	Why it matters	What a genuine lender does
Money requested before you have written terms	Upfront-fee scams take a “processing” or “insurance” payment and vanish	Sets out every fee, and when it is payable, in a written Letter of Offer
Payment to a personal account or by crypto	Legitimate lending businesses don’t collect fees this way	Uses business accounts and solicitor trust accounts
“Approved” before seeing the property	No secured lender can approve without assessing the security	Reviews the property, title and exit before making an offer
Unsolicited approval for a loan you never applied for	business.gov.au flags this as a scam to report	Responds only to enquiries you started
Web forms and chat only, no address or phone	Moneysmart lists limited contact options as a warning sign	Publishes a physical address and a phone number that answers
Brand-new website with stock or AI-generated staff photos	Moneysmart flags very new sites and fake staff images	Has a verifiable history and real people
Pressure to sign today without legal advice	Rushing is designed to stop you checking	Expects your solicitor to review the documents
Details that differ across sources	Moneysmart advises checking that phone, address and website are consistent	Keeps the same details on its website, ABN record and documents

If any of these appear, stop and verify independently. Use contact details you have found yourself, not the ones in the email or message you received.

How should money move in a genuine private loan?

In a real property-secured loan, money flows in a predictable way. You receive a written Letter of Offer setting out the amount, term, security and fees, including any assessment fee. Solicitors prepare the loan documents and mortgage or caveat. At settlement, the lender’s funds are released as directed, any existing lender is paid out, and the security is lodged with the land registry. Increasingly this happens in an electronic settlement workspace. Our guide on what happens at settlement shows the sequence, and our Letter of Offer guide explains what each section of the offer should contain.

The principle is simple: the lender pays you, through solicitors, against registered security. You should never be sending sizeable sums to a lender, or to an individual connected to it, to unlock a loan.

If you’d like to see what a straightforward process looks like from the first step, you can start an enquiry with no credit check.

What should my solicitor check before I sign?

Your solicitor is your last and best line of defence. Ask them to confirm:

• the lender entity named in the documents is the same entity you checked on ABN Lookup and ASIC;
• every fee in the loan agreement matches the Letter of Offer;
• the security is exactly what you agreed: which property, first mortgage, second mortgage or caveat;
• the default, extension and early repayment terms are clear;
• any guarantee is limited to what you expected.

Our costs guide helps you anticipate the fees your solicitor will see.

Illustrative example: A Perth electrical contractor receives an email offering a $300k business loan with “approval guaranteed”, asking for a $4,500 “file insurance” payment before documents are issued. Running the checklist takes twenty minutes. The ABN quoted belongs to a cancelled sole-trader registration in another state, the company name doesn’t appear on ASIC’s register, the website was created five weeks earlier and the staff photos turn up on unrelated sites. The contractor doesn’t pay, reports the email, and instead approaches a lender whose ABN is active, whose directors appear on the company extract, and whose Letter of Offer sets out its assessment fee in writing before anything is signed.

What should I do if something doesn’t add up?

Stop. Don’t send money, identity documents or bank logins. Verify the lender using phone numbers and addresses you have found independently, and report suspicious contact to Scamwatch. If you’ve already sent money, contact your bank immediately.

Checking us out? Here’s what you’ll find

We’d encourage you to run every one of these checks on us. Our about page explains who we are and how the site works with our lending partner fundU, the direct lender behind it.

When you’re comfortable, send your enquiry. It takes about a minute, there’s no credit check just to ask, your details aren’t forwarded to a crowd of lenders, and a real specialist reviews what you send. Give accurate details about the property and the balances owing on it, and the answer you receive will be one you can rely on.