Private credit in Australia in 2026: what ASIC found and what it means for borrowers

Private credit went from a niche term to a regulator’s headline in about a year. ASIC commissioned an independent review, ran surveillance across dozens of funds, published principles, issued stop orders and, by mid-2026, was telling the sector it faced its “first real test”. The Reserve Bank has been watching too.

Most of that work is about the funds that pool investors’ money and lend it out. But anyone who borrows from a private lender is on the other side of those loans, so the findings matter to business owners as well. This guide summarises what ASIC and the RBA have published since September 2025, with dates and report numbers, and then explains what it means if you’re borrowing against property in 2026. We’ll update it as new reports appear.

What is private credit in Australia?

Private credit is lending by non-bank lenders and investment funds, financed by investors such as super funds, family offices, wholesale investors and, increasingly, retail investors, rather than by customer deposits. It covers corporate loans, asset-backed lending and real estate finance. Property-secured business loans from a private lender sit within that broad market. Our guide to what private lending is in Australia explains the borrower’s side in detail.

Two numbers frame the debate:

• Size: ASIC’s REP 814 estimates the Australian market at about $200 billion, with roughly half focused on real estate, while cautioning that reliable data is hard to obtain.
• Share of the system: the RBA’s March 2026 Financial Stability Review puts private credit at less than one-fiftieth of the assets in the financial system.

Key terms

• Wholesale fund: a fund offered only to wholesale or sophisticated investors, with lighter disclosure rules.
• Retail fund: a fund offered to everyday investors, which must meet design and distribution obligations.
• Stop order: an ASIC order that stops a product being offered or distributed while concerns are addressed.
• “As is” versus “as if complete”: lending measured against a property as it stands today, compared with its projected value once a project is finished.
• Payment in kind (PIK): interest added to the loan instead of being paid in cash. REP 814 notes that rising use can signal stress. On a planned short-term business loan, capitalised interest is a deliberate structure agreed upfront; the concern is using it to hide a loan that can’t pay.

What did ASIC’s REP 814 find?

REP 814, Private credit in Australia, was prepared for ASIC by Richard Timbs and Nigel Williams and released on 22 September 2025 with media release 25-209MR. It is a high-level review of the sector rather than an audit of individual funds.

Its overall view was balanced. ASIC’s summary said: “If ‘done well’, private credit is good for both sides of the economic equation.” The report found institutional segments generally well run, and placed the weaker practices mainly in wholesale “sophisticated investor” funds and retail-facing offerings, particularly real estate funds.

ASIC highlighted concerns in these areas:

• Fees and remuneration: opaque structures, including managers keeping borrower-paid fees and margins that investors may not see.
• Related parties and governance: loans to related developers, transfers between funds, and managers holding both debt and equity in the same borrower.
• How loans are valued: how often, how independently, and whether problem loans are recognised promptly.
• Terminology: inconsistent use of terms such as “investment grade” and “senior debt”.
• Liquidity and concentration: mismatches in open-ended funds and unclear exposure levels.

REP 814 also described practices such as “amend, extend and pretend”, where a troubled loan is repeatedly extended instead of being dealt with. ASIC Chair Joe Longo said ASIC “expects meaningful action in response to these findings and will not hesitate to intervene where progress falls short.”

What did ASIC’s follow-up surveillance find?

On 5 November 2025 ASIC released REP 820, a surveillance report covering 28 private credit funds (20 retail and 8 wholesale) reviewed between October 2024 and August 2025. It was released alongside REP 823, ASIC’s response report on capital markets, and media release 25-264MR. Findings included:

• only four of the 28 funds disclosed to investors what they charged borrowers;
• some managers retained origination, default and margin income without disclosing it;
• fewer than half had detailed written credit, impairment and default management policies;
• definitions of “default” varied widely, so low reported default levels were hard to compare;
• loan-to-value figures reported on an “as if complete” basis could obscure risk;
• only two of the eight wholesale funds stress-tested their liquidity.

ASIC set out principles for the sector covering stewardship, capability, transparency, distribution, fees, conflicts, governance, how assets are valued, liquidity and credit risk. REP 820 summed up the regulator’s stance: “Private credit is good for Australia’s economy, borrowers and investors, but only if done well.” Commissioner Simone Constant added: “If we do not see material improvements, we are prepared to pursue stronger regulatory action.”

What has ASIC done since?

Date	Publication or action	What it said or did
22 Sep 2025	REP 814 and 25-209MR	Sector review; about $200 billion; concerns on fees, conflicts, how loans are valued and terminology; stop orders on several retail funds
5 Nov 2025	REP 820, REP 823 and 25-264MR	Surveillance of 28 funds; principles for private markets; capital markets roadmap
9 Dec 2025	Catalogue of legal obligations	A reference guide for private credit fund operators; guidance updates planned for 2026–27
Late 2025	Conflicts guidance	Update to Regulatory Guide 181 on managing conflicts of interest
2026	Enforcement priorities	Poor private credit practices named a 2026 enforcement priority
18 Jun 2026	“Private credit on notice” update	Survey of 52 funds run by 22 managers, around $76 billion; warns the sector faces “its first real test”
22 Sep 2026	26-225MR	Interim stop orders on retail private credit products over target market concerns, revoked on 1 October after the issuer amended them
8 Oct 2026	26-234MR	Interim stop order on a disclosure document for registered mortgage schemes investing in short-term property loans

The June 2026 update matters most for borrowers. ASIC’s eight-week survey, run from 26 March to 14 May 2026, found credit deterioration emerging unevenly, with pockets of higher defaults, impairments and loan amendments. It reported that inflation, rising costs and supply disruptions were weighing on borrowers, and that softer investor inflows were slowing growth and tightening lending conditions. ASIC warned that reported loan values may not reflect economic reality, particularly in property development, and that some portfolios were heavily exposed to a single developer group. Its message to the sector: “Market participants should not wait for formal defaults before reassessing asset values and related risks.”

What does the RBA say about private credit risk?

The RBA takes a system-wide view. Its March 2026 Financial Stability Review found that lending by both traditional non-bank lenders and private credit continued to grow strongly, faster than bank lending, and that non-banks play an important role where banks tend not to compete.

It reported some easing in non-bank lending standards, most notably for property developers through less stringent presale requirements and some reduced collateral requirements, but said this had not led to a substantial deterioration in asset performance to date. Because private credit remains small relative to the financial system, the RBA judged the stability risks contained, while noting that limited visibility over these markets restricts what regulators can see.

What does all this mean for business borrowers?

ASIC regulates the funds, not the property-secured business loan you sign. Loans made predominantly for business purposes still generally sit outside the National Credit Code. You’ll feel the effects indirectly:

1. Expect closer questions about your exit. Lenders under scrutiny want evidence that a sale or refinance is real. Our guide to exit strategy red flags shows what they look for.
2. Don’t count on a rollover. With ASIC watching loan amendments, extensions are harder to assume. Build a buffer into the term and read private loan term extensions before you need one.
3. Get every fee in writing. ASIC found fees that investors didn’t see. As a borrower, insist the Letter of Offer lists every fee and then work out the total cost of a short-term loan.
4. Prefer lending against what exists today. ASIC’s concern about “as if complete” figures is a reminder that a loan sized on a future value carries more risk for everyone. Funding secured on property you already own, assessed as it stands, is simpler to underwrite and to repay. Our construction loan vs property-secured developer funding comparison explains the difference.
5. Know who you’re dealing with. Is it the lender, a fund manager or a broker? Our comparisons of a direct private lender vs a finance broker and a private lender vs a non-bank lender explain the differences, and how to check a private lender shows how to verify one.

Illustrative example: a Newcastle builder needs $600k to secure a townhouse site and cover early holding costs. Illustrative: one offer sizes the loan on the projected end value of the finished project and adds fees at each stage. The other is a 12-month private first mortgage over two completed units he already owns, assessed as they stand, with interest capitalised and every fee listed in one Letter of Offer. He compares the total cost of each to maturity and chooses the second, because its repayment doesn’t depend on a project that hasn’t started. Our site deposit funding page explains that structure.

If you’d like to see how a straightforward property-secured loan would look for your situation, send us the details.

Looking for a private lender that keeps things simple? See if you qualify

The Secured Business Finance team works with fundU, a direct private lender that funds business loans from $20k to $5m against residential, commercial or industrial property. There’s no formal valuation required, interest can be prepaid or capitalised, and funding is possible within 24–48 hours once documents are in.

Enquiring doesn’t involve a credit check, and your details aren’t shopped around a panel of lenders. A specialist reviews each enquiry personally. Answer accurately about the property, what’s owed against it and how you’ll repay, and you’ll get a clear answer the first time. Start your 60-second enquiry.