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Brander Smith McKnight advises borrowers and lenders, including finance companies and second-tier or non-bank lenders, on loan agreements, deeds of guarantee, security documents and the enforcement of securities including mortgages over real property.
Banking & Finance Lawyers Sydney
Brander Smith McKnight Sydney Lawyers has a team of highly experienced finance lawyers who act for finance companies and borrowers. All of our finance lawyers have completed many transactions acting for both borrowers and lenders.
The Growth of Non-Bank or Second Tier Lenders
Non-bank and non-listed mortgage funds have grown massively across the Australian financial sector, with their provision of credit increasing by around 240% over the past 10 years, as noted by the Australian Securities and Investments Commission. Private lenders, and what are often referred to as, second-tier lenders are not, in all circumstances, subject to the National Credit Code. The growth of such lenders has provided opportunities to many investors, who earn a return on such lending, and benefits to many borrowers, particularly for business purposes.
Regulation of Second Tier Lenders and the National Credit Code
The Banking Act 1959 (Cth) regulates banking business and section 9 of the Banking Act 1959 (Cth) prohibits any person that is not authorised by the Australian Prudential Regulation Authority (APRA) from carrying on banking business. Any body corporate which is authorised by APRA is called an Authorised Deposit Taking Institution (ADI) and APRA publishes a list of all ADIs.
The National Consumer Credit Protection Act 2009 (Cth) includes the National Credit Code that provides a national consumer credit regime. The National Credit Code includes, among other things, requirements for credit contracts for personal, domestic and household use and licence obligations and standards for the providers of credit.
In certain circumstances non-bank or second tier lenders are not obliged to comply with the National Credit Code, particularly where the loan is for business purposes. There has been recent growth in this form of lending.
Brander Smith McKnight Recent Successful Banking & Finance Matters
Tax debt excused due to Fraudulent use of Business ABN (2025)
Our client, a sole trader, had his business ABN stolen and used in a string of fraudulent activity by persons unknown. The Australian Taxation Office demanded payment for our client’s presumed tax liabilities. The financial lawyers at Brander Smith McKnight drafted extensive legal correspondence with the ATO outlining the fraudulent nature of the business activity and our client’s innocence. This was ultimately accepted by the ATO and the request for payment was withdrawn. Our banking and financial lawyers continued to provide strategic legal advice that protected our client’s financial and legal interests.
Trust Structure Change has Unexpected Taxation Consequences (2025)
Brander Smith McKnight banking and financial lawyers regularly assist clients with complex trust and tax-related legal issues, particularly where longstanding trust structures give rise to unexpected taxation consequences. In this matter, we provided comprehensive legal advice and representation in relation to the administration of a family trust, its legal issues and land tax implications. The matter involved analysing a trust deed and advising on the legal consequences of the trust reaching its vesting date. We identified that the nature of the trust had changed from a discretionary trust to a fixed trust once the vesting date had passed. We therefore advised the trustee and beneficiaries of their legal obligations and rights following vesting, including the operation of trustee discretions, the entitlement of beneficiaries to trust capital and income, and the proper management of trust property. Our experienced lawyers also provided guidance on issues such as trustee duties, potential breaches of trust, the tracing of trust funds, and conflicts that can arise between trustees and beneficiaries when trusts are not properly administered.
Legal Advice & Sign Off for Loan for Restaurant by Finance Company (2025)
Our client, who ran a successful restaurant, required finance from a second-tier finance company, for the expansion and renovation of his restaurant. The restaurant was owned and operated by our client’s company. To secure the loan, the finance company required a personal guarantee and a certificate of legal advice. The experienced banking and finance lawyers at Brander Smith McKnight advised our client of the risks associated with this loan and suggested methods to minimise the risks. We negotiated and amended the contracts to address the most significant risks. Finally, we provided the finance company with the power of attorney required if the client defaulted on the loan.
Borrower Advice and Certificates of Legal Advice
Entering into a loan with a finance company can be a very significant transaction and requires careful legal analysis to understand all of the terms and the legal risks. In many such loans even for business purposes the borrower will be required to provide security often in the form of personal guarantees from company directors. Such a personal guarantee will nullify the protection that a company structure (corporate veil) usually provides to a company director. Personal guarantees are often secured with a mortgage over personal assets such as the family home and thereby places the family home at risk in the event of a company failure.
It is important that borrowers obtain sound legal advice regarding the loan documents and the risk and legal effect of such documents. Where appropriate the documents should also be negotiated to avoid any unreasonable risk to the borrower.
Many lenders will also require the borrower and any guarantors to obtain a certificate of legal advice. This certificate involves the lawyer providing comprehensive legal advice on the terms and risk of the transaction. The certificate of legal advice is provided to the lender to ensure that the borrower has obtained legal advice and allows the lender to rely on that certificate.
The banking and finance lawyers at Brander Smith McKnight Sydney Lawyers have extensive experience advising borrowers and acting on behalf of borrowers to ensure that the loan and guarantee documents are properly negotiated and drafted and the borrower understands any residual risk associated with the finance transaction. Our finance lawyers also have specific additional relevant qualifications including a Bachelor of Business in Accounting or a Master of Business Administration or a Bachelor of Commerce.
Contract, Loan Agreements, Guarantees and Security Documents
The finance lawyers at Brander Smith McKnight have extensive experience drafting and negotiating loan agreements, deeds of guarantee for company and personal guarantees and the security documents necessary to secure payment pursuant to any loan or guarantee. All of our finance lawyers have acted for borrowers, both personal and business and finance companies and acted in transactions from small equipment loans to major structured finance arrangements for property and infrastructure development.
Call us to arrange a free 20 minute no obligation consultation that includes case evaluation and cost estimate.
Enforcement of Securities
The main risk for any lender is the failure of the borrower to repay the loan. The banking and finance legal team at BSM Sydney Lawyers have extensive experience advising lenders on the most appropriate form of security, which will depend on the nature of the transaction, the credit worthiness of the borrower and the terms of the loan. The security documents may be as simple as a security registered on the personal property security register, a personal or parent company guarantee or a more secure form of security such as a registered mortgage over real property.
The Real Property Act
Where real property is available a mortgage over that property is generally the most secure form of security. If a mortgagor defaults on their mortgage payments, a mortgagee has numerous legal options to recover the debt, including, in certain circumstances, foreclosure. Foreclosure is the process of a mortgagee taking possession of a mortgaged property when the mortgagor is in default of the loan.
The mortgagee can seek an order for possession of the property and a judgement for the outstanding debt. The Court requires evidence of six or more months of failed loan repayments and must be satisfied that the section 57 (Real Property Act 1900 (NSW)) notice is compliant and has been served correctly, before determining whether ‘mortgagee in possession’ is declared. If the Court is satisfied and makes the orders sought by the mortgagee, the mortgagee will have the legal entitlement to possess, manage, lease or sell the property in order to recover the outstanding debt. The Court’s order will stipulate a date by which the mortgagor must vacate the property.
The banking and finance lawyers at Brander Smith McKnight have extensive experience in negotiating and litigating the enforcement of unpaid loans and security documents, including foreclosure proceedings in the Supreme Court of New South Wales.
Debt Recovery
Our finance lawyers have extensive experience in debt recovery and in particular debt recovery of unpaid loans. Brander Smith McKnight has undertaken many debt recovery matters for a wide range of clients including some of the world’s best known companies and brands, small and large corporations, Councils, debt collection agencies and many more for small to major debts.
The debt recovery process will usually commence with a letter of demand setting out the amount demanded and the breaches pursuant to the loan and guarantee documents. This will often result in payment or negotiation of payment. In the absence of payment legal proceedings will generally be commenced with a Statement of Claim, ultimately resulting in payment or various enforcement measures such as winding up a debtor company, bankruptcy of a natural person, garnishee orders, writs for levy of property or similar. For further information please see our page on debt recovery.
In the event that the borrower is in default and has provided security, enforcement will be based on the security provided, such as issuing a default notice pursuant to section 57 of the Real Property Act 1900 (NSW) where the borrower has provided a mortgage over real property as security.
How Can BSM Sydney Lawyers Assist you with Banking and Finance?
Our team of highly experienced banking and finance lawyers pride themselves on providing clear, easy to understand, personalised and practical advice. We provide professional legal advice to individuals and financial businesses. We pride ourselves on providing all clients with the same level of premium, highly responsive service and attention to detail. Our lawyers will get the job done at considerable saving compared to large city firms.
Our finance lawyers have extensive experience with finance companies and other second-tier lenders and can assist with enforcement of securities and all contract review and drafting requirements, including loan agreements, deeds of guarantee and security documents.
Our senior banking and finance lawyers offer a free 20 minute consultation to discuss your matter.
Call us to arrange a free 20 minute no obligation consultation that includes case evaluation and cost estimate.
FAQs
Can I Operate a Lending Business?
Yes. Any person may conduct a lending business on the condition that they have the appropriate licence.
Section 29 of the National Consumer Credit Protection Act 2009 (Cth) prohibits anyone from engaging in “credit activities” without a credit “licence”. Section 6 defines “credit activity” to include the provision of credit as a business, providing consumer leases and where the person is a mortgagee for a mortgage to which the Consumer Credit Code applies. The National Credit Code is in Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth) and states that the National Credit Code applies to a mortgage where the mortgage is provided to a natural person or strata corporation and the mortgage secures payment under a “credit contract”. A credit contract is defined to include contracts to provide credit in the course of business or ancillary to a business. https://download.asic.gov.au/media/z15jyjsx/rg203-published-12-october-2017-20250508.pdf
Do I need a Credit Licence to Loan Money Secured with a Mortgage to a Friend or Family Member?
No. You don’t need a credit licence to provide a loan secured with a mortgage to a friend or family member. The only condition is that the lender does not provide loans or credit as a business. Where the loan is simply a private arrangement between friends or family members a credit licence is not required.
Am I Providing Credit & do I need a Credit Licence if my Business offers Payment Terms on an Invoice?
It depends on the payment terms. If the payment terms on the invoice are less than 62 days and interest and fees do not exceed 5% of the price, section 6(1) of the National Credit Code provides an exemption from the National Credit Code. In other words, you don’t need a credit licence.
Can the Bank take my House if I Default on my Mortgage?
Yes the bank can take your house if you default on your mortgage. However, the bank or any mortgagee, such as a finance company, must follow a process set out in the Real Property Act 1900 (NSW) prior to seeking to foreclose on the property. The bank must provide the borrower with a notice of default as a first step. The notice must state that it is a notice pursuant to section 57 of the Real Property Act 1900 (NSW) and provide the mortgagor with one month to rectify the default. This notice can be sent to the borrower anytime during or after 6 months of nonpayment.
It is important to note that any application cannot be made to the court until the expiry of the 6 month period of nonpayment.
These two procedural requirements, (section 57 notice and six months of default) must both have been satisfied prior to any application to the Court for foreclosure and ultimately a power of sale.
The banking and finance lawyers at Brander Smith McKnight Sydney Lawyers offer a free 20 minute consultation and can discuss your individual situation.
What is the Difference between a Bank and a Finance Company?
The main difference between banks and a finance company is that banks are authorised to take deposits (Authorised Deposit taking Institutions, ADIs) and finance companies cannot take deposits. Banks fund their lending largely through such deposits whereas finance companies fund their lending from fund markets.
In addition, banks are regulated by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959 (Cth) and finance companies are regulated by the Australian Securities and Investments Commission (ASIC), primarily under the National Consumer Credit Protection Act 2009 (Cth).
Brander Smith McKnight Lawyer Sydney has conveniently located Offices
Sydney CBD
Level 57 25 Martin Place Sydney NSW 2000
Sutherland
Suite 2/9 15 East Parade Sutherland NSW 2232
Parramatta
Level 14, Suite 2/3 Parramatta Square Macquarie Street Parramatta NSW 2150
Wollongong
Level 1, Suite 1 90 Market Street Wollongong NSW 2500
Shellharbour
Unit V20, Shop 1 4 Benson Avenue Shellharbour City Centre NSW 2529
Suite 2/9 15 East Parade Sutherland NSW 2232
Level 57 25 Martin Place Sydney NSW 2000
Level 14, Suite 2/3 Parramatta Square Macquarie Street Parramatta NSW 2150
Level 1, Suite 1 90 Market Street Wollongong NSW 2500
Unit V20, Shop 1 4 Benson Avenue Shellharbour City Centre NSW 2529
Your Banking & Finance Team
Get in touch
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