Private credit: The new capital architecture in the age of advisory

Aquamore operates within Australia’s private lending market, serving small businesses seeking capital in an increasingly competitive economic environment. As access to traditional financing tightens for many borrowers, the firm is a viable source of commercial finance, particularly for businesses pursuing long-term real estate investment opportunities.

Private credit’s increasing prominence

At a time when market conditions and the broader economic climate is becoming more and more challenging for small and medium-sized enterprises to navigate, can and should be increasingly thinking about, and exploring, private credit as a viable option to support the growth of their clients’ operations.

As Aquamore head of distribution Matthew Porch explains, private credit has become much more sophisticated in the last 5-10 years, allowing such lending to push back on enduring negative connotations. Such sophistication allows private credit to get past those barriers, and establish itself as a frontline avenue in a rising interest rate environment, he said.

Educating clients about a ‘legitimate form of finance’

Aquamore recently hosted a roundtable luncheon, in partnership with Accountants Daily, at which practitioners from across the spectrum discussed the place for private credit in the current climate, the inherent opportunities for SME clients, and how accountants can position themselves as capital advisers, supporting business growth.

Over lunch, SKF Advisory director Steven Fornasaro said he views the growth in private credit as a “good thing”, and he hopes to see it become more mainstream and less stigmatised, given the importance of money-lending to help businesses scale and invest for the long term. Private credit, he said, is a good way to secure funds in a time when traditional relationships with established lenders like banks are “basically gone”. To this end, he said, there is a “massive space” for SMEs that needs filling, and private credit is well-placed to fill that gap.

My Accounts chief executive Noel Tiufino agreed, noting that whenever he gets enquiries from clients about financial assistance, they’ve almost always already exhausted options with traditional lenders. In years gone by, he mused, bankers had a “really intimate knowledge” of one’s business and lending could be secured via those long-term relationships, whereas “that’s just not the case now”.

Donald & Co Accounting Services founder Bianca Donald spoke about her rural-based clients, who generally look to traditional lenders because “it’s what they know – they don’t have a broad knowledge about what’s on the market”. Blake Jenkins, the director of Count Out Loud, said his clients will also look to the banks first, and then explore what he described as “sugar hit” capital loans. Moving forward, he warned, it is becoming harder and harder for SMEs to get the funding they might need, and they need to be looking elsewhere.

It is here that private credit, through Aquamore, must be a foremost consideration for clients and the accountants advising them.

Circle Advisory Partners founder and director Dominic Myssy has used private credit for clients before, and observed that “it’s a legitimate form of finance”. Such instances have taught him, he explained, that entrepreneurial clients find the requirements and documentation “less onerous”, creating a better client experience – and one that won’t impact their credit file.

 With this in mind, and as pointed out by Elevate Accounting Company director Ryan Addinsall, educating clients about private credit is imperative in not only better supporting SMEs in trying economic times, but also in pivoting one’s service delivery to incorporate capital advisory.

“I think the biggest gap that we need to fill is education; not only for the client, but also the channel. Private credit is there as a valid option. From what I’m seeing, it’s a perfect storm in terms of the external environment, and what I’m finding – particularly in dealing with the younger generation – is they’re far more open to other options. We’ve got to bridge the gap and get those clients in front of private credit, as they’re very open to it,” he said.

Given the likelihood of widespread acceptance and willingness from SME clients to explore private credit, which roundtable attendees were in agreement about, practitioners have a duty, Tiufino observed, to find lenders with clients’ interests at the heart of a service offering. By emphasising competitive rates and flexible lending structures, Aquamore offers borrowers terms that remain attractive even as market pressures intensify. This model reflects the broader shift in Australian business finance, pointed out at the roundtable: there is a growing need for, and eventual reliance on, private lenders to fill gaps left by conventional institutions.

Evolving advisory roles for accountants

Much has been made in recent times, with the proliferation of new technologies and the emergence of artificial intelligence, about how accountants must pivot their client service delivery to be more advisory-focused, and are freed up to do so, as myriad low-value, high-volume tasks and processes are absorbed by tech. In the midst of a rapidly-shifting tax landscape, with a brighter spotlight being shone by regulators on business activity, and given continued economic and environmental turmoil, accountants also need to consider positioning themselves as capital advisers as well as strategic ones.

Addinsall, for his part, feels good about this idea, saying “I think we need to embrace it.” Accountants’ roles are shifting as a result of AI, especially in moving away from number-crunching, he said, and capital advisory is a “natural step for us” as practitioners position themselves as trusted confidants.

Often, he continued, accountants will take the risk-averse road with traditional lenders and existing pipelines and contacts because that is what is known. But, he said, if accountants “get over that hump” with private credit, they may well be taking a step that is both in the best interest of their clients, and can yield the best outcome.

Porch supported this, noting the opportunity cost is something that accountants must consider, in avoiding their clients leaving borrowing too late. Getting on the front foot, and pricing risks appropriately and weighing up options, is a critically important conversation to be having with clients.

‘There’s now another option’

Speaking following the roundtable lunch, Fornasaro said he sees private credit as a “natural fit” in the trusted advisory role accountants will increasingly play with clients. “Considering that we’re looking after the financial livelihoods of our clients, private credit really is just a natural part of that.”

Pyke added that it’s exciting to know there’s a viable option in private credit as her clients head into the new financial year – and it’s something she wants them to know more about.

Given where the market and broader economy is at, as well as the corresponding pressures clients are facing with cash flow, she said, “it’s a great time to have this become a real opportunity and option for them. It’s exciting”.

Aquamore is an institutionally-backed private lender that provides commercial finance to Australian businesses, property developers, and investors, and is renowned for delivering quick, competitive, and flexible lending solutions to support business growth, nationwide. To learn more about how its lending works, click here. To learn more about its referral program for accountants, please reach out to our Aquamore BDM team.