Private lending in South Africa, explained properly.

Private lending is credit extended outside the banking system and funded by private capital. A borrower needs money now and can repay more later; the difference between those two amounts is the price of the money, and it is paid to whoever supplied it. The lender’s return is interest — not a share of profits, not a rising valuation, and not a number on a statement that moves with a market.

That single fact does most of the explanatory work on this site. Because the return is interest, nothing has to go up for a private lender to be paid. And because the return is interest, the only questions that really matter are whether the borrower repays, what stands behind the loan if they do not, and how long the capital is committed before it comes back.

In South Africa the activity is lawful and bounded rather than unregulated. The National Credit Act 34 of 2005 requires the party that grants credit to be registered with the National Credit Regulator, caps what a borrower may be charged, and — with the common-law in duplum rule — stops arrear interest running once it equals the outstanding capital. Where the registration obligation falls, and why that is the question most people get wrong first, is set out in how private lending works.

Security is the most misunderstood word in this subject. A mortgage bond, a notarial bond, a cession of book debts or a suretyship does not make repayment certain. It changes what a lender may do, and where a lender stands, when repayment fails — and every one of those remedies costs time and money before a rand comes back.

Private lending carries credit risk, concentration risk, liquidity risk, documentation risk, counterparty and administration risk, interest-rate risk on floating returns, currency risk where capital goes offshore, and the plain risk of fraud. A page that lists none of those is selling something. Risk, security and repayment sets out each of them, what the recovery path looks like in practice, and the warning signs of an arrangement worth walking away from.

A verified private-lending consultant, as the term is used here, is someone whose identity has been confirmed, who has completed the required training, who holds a current consultant agreement, who is in good standing, and whose status can be checked on a public profile. Each criterion, and the evidence behind it, is published in the verification standard.

Verification is not regulatory approval, government recognition, authorisation to give financial advice, approval of any lending product, a guarantee that capital is safe, or a promise about anyone’s future conduct. There are 10 consultants currently listed as verified; the listings, and the date each was last reconciled, are on the consultants page.