At the start of every lending transaction is a fundamental question: what is the purpose of the loan?

That answer does more than shape the lending pathway. It sets the legislative framework for the transaction and determines how credit risk is assessed.

For brokers, getting this right early in the transaction is critical to execution.

Where a loan is provided for personal, domestic, or household purposes, or to purchase, renovate or improve residential property for investment purposes or to refinance credit previously provided for this purpose, it falls within the National Credit Code under Australia’s NCCP Act and is classified as consumer (coded) lending. Assessment focuses on affordability, including the borrower’s income, expenditure, liabilities, and capacity to service debt on a household basis.

Where a loan is provided for genuine business purposes, it will fall outside the National Credit Code and be treated as commercial (non-coded) lending. Assessment considers both the borrower and the transaction itself, including the purpose of the facility, the security position, the borrower’s contribution, and the proposed repayment or exit strategy.

Understanding the purpose of the loan from the outset helps ensure the transaction is assessed within the framework most appropriate to its underlying characteristics, supporting clearer assessment, faster credit decisions, and more reliable funding outcomes.

Equity-One operates exclusively as a commercial, non-coded lender, where transactions look different to consumer credit. Typically, they involve multiple entities, trust or corporate structures, layered security positions, and time-sensitive funding linked to acquisition, restructuring, or growth activity. In commercial lending, these are standard features of business-purpose property-backed facilities and commercial loans.

This structural complexity is one of the reasons why private lending requires a distinct approach. Consumer frameworks are designed for standardised personal financial assessment. Commercial lending requires a framework that can assess transactions in its full commercial and structural context.

As Equity-One’s Credit Analyst Vivien Wang explains:
“Non-coded lending is not an alternative to consumer credit. It is a distinct segment of the credit market because business-purpose lending requires a framework capable of accommodating structural complexity and transaction-specific risk.

Determining whether a transaction sits inside or outside the National Credit Code defines the framework under which it is assessed. From there, assessment is undertaken case by case, with consideration given to borrower equity, purpose, security position, structure, and exit strategy or refinancing pathway.”

As the commercial finance landscape continues to evolve, this remains of central importance – not only from a regulatory perspective, but as a practical lever for improving funding outcomes for SME and commercial borrowers.

*This article is provided for general informational purposes only and does not constitute legal, financial, or credit advice. Credit classification and regulatory obligations depend on the specific circumstances of each transaction, and professional advice should be obtained where appropriate.

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