Private credit is the segment of the lending market where capital is provided by non-bank financiers and funded from wholesale sources, private credit funds, family offices, institutional mandates, warehouse facilities, rather than from retail deposits regulated under the prudential regime.
Financial services licensing and consumer credit licensing are different regimes. Which requirements apply depends on the entity, its activities, the borrower and the purpose of the credit. An Australian financial services licence does not guarantee an investment and is not a substitute for APRA prudential supervision. Banks (ADIs) are regulated by both APRA and ASIC; the prudential APRA regime is what allows them to take retail deposits.
The structural advantages of private credit over bank lending: faster decisioning, flexibility on credit policy (self-employed, recent credit events, non-standard security), and capacity to structure files file-by-file rather than against a centralised template. The trade-off is rate, private credit typically prices 200-400bp above the equivalent bank product to reflect higher cost of capital and bespoke underwriting.
Borrowers and investors choose private credit deliberately, not because they can't get bank funding.