4 min read
QUICK SUMMARY
- THE STORY: Bathla Group collapsed into voluntary administration owing roughly $3.2 BILLION, much of it to private credit lenders.
- THE WARNING: MA Financial restricted withdrawals from its $2.3 BILLION private credit fund to 1 PER CENT of funds under management per monthly period.
- THE TAKEAWAY: Non-bank lenders remain legitimate and useful, but lender stability now matters as much as the interest rate.
- THE TIMING: Rising rates and property-development stress are testing a sector that expanded rapidly during the low-rate years.
- THE FIX: Compare multiple lenders, understand the facility behind the offer and prepare your application properly before credit conditions tighten further.
WHAT JUST HAPPENED
Bathla Group, a Sydney home builder and developer, collapsed into voluntary administration on 25 August 2026 with roughly $3.2 BILLION in liabilities. Much of that debt was provided by private credit, also known as non-bank lending.
Teneo was appointed voluntary administrator and began urgent discussions with lenders to keep construction running. Reported private credit exposure includes Centuria, through six first-mortgage-backed facilities, as well as PAG Asia Capital, CVS Lane Capital Partners, Balmain, Ray White Capital, Keyview, Credit Connect and La Trobe Financial.
The same week, MA Financial restricted withdrawals from its $2.3 BILLION MA Secured Real Estate Income Fund. Redemptions were limited to 1 PER CENT of funds under management per monthly period, effective from 25 August and for at least three months.
In plain English, investors could not all ask for their money back at once. That does not automatically mean the fund is insolvent, but it does show how quickly liquidity can become a concern when a fund owns loans secured against property and investors want cash.
For borrowers, the lesson is simple: the organisation providing the loan matters. The cheapest headline rate is only useful if the lender can fund, settle and manage the facility through the full term.
WHY IT IS CALLED A COCKROACH MOMENT
The AFR’s Chanticleer column described Bathla as Australian private credit’s “cockroach moment”. The phrase is colourful, but the underlying point is serious: one highly visible failure can lead the market to ask what else may be hiding beneath the surface.
Private credit grew quickly when interest rates were low and banks became more selective. Non-bank lenders filled important gaps for developers, investors and business owners who needed speed, flexibility or a structure that did not fit traditional bank policy.
Now, higher rates, construction-cost pressure and weaker property conditions are testing those loans. The concern is not that every private lender is vulnerable. It is that some lenders may be heavily concentrated in property development, highly reliant on investor funding or carrying valuations that have not yet caught up with economic reality.
RBA Governor Michele Bullock has raised concerns about transparency and the lack of reliable data across Australia’s roughly $250 BILLION private credit sector. ASIC has also warned that private credit valuations may lag behind economic reality as stress emerges.
That combination makes lender due diligence more important. A loan can be secured by property and still involve risk if the valuation, borrower cash flow, project feasibility or exit strategy changes.
WHAT THIS MEANS FOR BORROWERS
Private credit is not automatically a bad option. For a Perth business buying a warehouse in Wangara, funding equipment for a growing operation or arranging working capital, a non-bank lender may provide a practical solution when a bank cannot move quickly enough.
The trade-off is that many non-bank lenders raise money through investors, wholesale funds or managed investment vehicles. If those investors seek withdrawals, the fund may need to preserve cash rather than write new loans or release funds quickly.
For borrowers, that can appear as narrower credit criteria, higher pricing, tougher valuations, slower settlements or additional conditions before a drawdown. A lender that was enthusiastic about a project six months ago may be more cautious today.
This is particularly relevant to commercial borrowers with deadlines. Development finance, acquisitions and property settlements do not always respect a lender’s changing appetite. A delay can create extension fees, additional interest, missed settlement dates or pressure to accept more expensive funding.
For every commercial application, prepare the file early. That means current financial statements, recent entity statements, signed lease schedules where relevant and prompt access for the lender’s valuer when requested. Good documentation will not remove risk, but it can reduce avoidable friction.
FIVE THINGS TO CHECK BEFORE YOU BORROW
STEP 1: WHO IS ACTUALLY LENDING THE MONEY?
Is the lender a bank, a private credit fund, a wholesale lender or another financial institution? Ask who sits behind the facility, where the funding comes from and whether the party approving the loan is also providing the capital.
STEP 2: HOW LONG HAVE THEY BEEN LENDING?
An established lender with a diversified book may behave differently in a downturn from a newer entrant still building its loan portfolio. Ask about experience in your type of transaction and how the lender handled previous periods of market stress.
STEP 3: HOW CONCENTRATED IS THEIR BOOK?
A lender heavily exposed to one sector, geography or type of development can feel pressure faster when that market weakens. This does not mean concentration is always wrong, but it should be understood alongside your own risk appetite.
STEP 4: WHAT HAPPENS IF THE FUND RESTRICTS REDEMPTIONS?
Before signing, review drawdown conditions, review rights, default provisions, extension options and any clauses that allow the lender to change terms. Understand what happens if funding is delayed or a valuation comes in below expectations.
STEP 5: GET A BROKER TO COMPARE THE FIELD
A broker who negotiates across multiple lenders can help identify which facilities remain available and which lenders are quietly tightening. For a commercial property loan, that comparison may be just as important as the interest rate.
The same applies to business acquisitions. If you are considering acquisition finance, the funding source, settlement certainty and exit plan should be assessed together rather than treated as separate paperwork exercises.
RISKS AND WHAT COULD CHANGE
Non-bank lending is not going away. It remains an important source of funding for property, equipment, acquisitions and business cash flow, particularly where a borrower has a sound strategy but does not fit a bank’s standard lending box.
The likely outcome is selective stress rather than a universal collapse. Expect lenders to focus more closely on leverage, borrower equity, project feasibility, valuations, presales, tenant quality and realistic repayment plans.
Do not panic-switch lenders mid-project without professional advice. Your existing bank or non-bank lender may still be the right home, especially if it understands the asset, the business and the agreed funding plan.
The sensible response is not fear. It is preparation, comparison and transparency.
TERMS TO KNOW
- Private credit: Loans provided outside the traditional banking system, often by funds or specialist lenders.
- Non-bank lender: A lending organisation that is not a conventional authorised deposit-taking bank.
- Redemption: An investor’s request to withdraw money from a fund.
- Funds under management: The total value of assets managed by an investment fund or manager.
- Valuation: An independent assessment of an asset’s estimated market value, often used by a lender to determine security and borrowing limits.
THE BASELINE DIFFERENCE
At Baseline Finance, we provide jargon-free and transparent advice based on your goals, your business fundamentals and your risk appetite.
We compare funding options across the market, manage lender negotiations and handle the paperwork as your single point of contact. Our Strategic Funding Plan provides a clear, benchmarked roadmap within 7 days, helping you understand not only what may be available but also what the funding could cost and where the risks sit.
CONTACT BASELINE FINANCE
Phone: 08 6108 3925
