ASIC Private Credit Warning Puts Non-Bank Funding Under the Microscope

The regulator reviewed 24 wholesale and retail private credit funds with a combined $18 billion in assets under management between November 2025 and August 2026. ASIC said many concerns it had previously identified remained, including complex fund structures, incomplete fee disclosure, distribution issues and conflicts management. The findings come as the collapse of Bathla Group has become a prominent warning sign for property-linked lending and private credit exposure.

For small businesses, private credit and other forms of alternative lending can still play a useful role, particularly where traditional banks are slower, more conservative or less suited to a specific funding need. However, the current scrutiny suggests borrowers may increasingly face closer questioning about cash flow, security, valuations, related-party arrangements and the intended use of funds. That may feel more onerous, but it can also encourage a more disciplined conversation before debt is taken on.

The practical lesson is not that non-bank finance should be avoided. Rather, SMEs should separate speed from suitability. A fast approval pathway can be valuable when stock, equipment, payroll or project timing is tight, but speed does not remove the need to understand the repayment profile, default consequences, personal guarantees, establishment fees, valuation assumptions, early repayment costs and any restrictions on how the facility can be used.

• Ask whether pricing is expressed as an annual rate, factor rate, line fee, establishment fee or another structure.
• Check what security or guarantees are required and what happens if revenue falls below forecast.
• Model repayments under conservative sales assumptions, including delays in customer payments or project milestones.

For planning purposes, general tools such as a business loan repayment calculator can help illustrate how rate, term and loan amount assumptions may affect cash flow. These estimates are not offers or approvals, but they can support clearer internal budgeting. As regulators push for better private credit standards, SME borrowers have a similar opportunity: review funding documents carefully, compare total cost rather than headline convenience, and seek professional guidance where loan terms are difficult to interpret.