In short
You are a lender. Not an investor, not a shareholder, and not a customer of a product. The money buys you a contractual claim on a named borrower.
There is a second, separate question that lesson five answers in full: whether you are the credit provider under the National Credit Act. That is a statutory status, not a description of a person — and you can be a private lender without holding it.
01One loan, three seats
The same transaction gets a different name depending on who is describing it. None of the three is wrong. They are three vantage points on one piece of paper.
| The seat | What they are doing | What they call it |
|---|---|---|
| The lender | Putting capital out to a borrower | Private lending |
| The borrower | Taking the money and agreeing to repay it | A loan. Debt. |
| The market — funds, allocators, analysts | Reporting on many such loans as a category | Private credit, or private debt |
Arguments about which word is correct are usually two people describing one loan from two chairs. The useful question is not which word is right. It is which seat am I in, because that decides what you hold and what you must do.
The Association uses private lending rather than private credit on purpose. One puts a person in the lender's chair, where the risk actually sits; the other puts them in an allocator's chair, with an allocator's defences that they do not have.
02Why “investor” is the wrong word
People say investor out of habit, and the habit imports expectations that do not apply.
| If you think of yourself as | You expect | What a loan actually gives you |
|---|---|---|
| An investor | Growth, and a value that moves | A fixed amount owed, which does not move |
| An investor | To sell when you want out | No market to sell into |
| An investor | A product provider behind it | A borrower, and a contract |
| A lender | To be repaid, with interest, on terms | Exactly that — if the borrower performs |
The word also changes who you think is responsible. An investor has a provider to complain to. A lender has a debtor to pursue, and the pursuing is theirs to do.
03The fourth word, which is not a seat
Credit provider is a status under the National Credit Act. It attaches to whoever grants the credit under the agreement. It is not a description of a person, a job title or a level of seriousness.
The Act also treats somebody who later acquires the rights of a credit provider under a credit agreement as a credit provider in their own right. So the status can arrive by purchase, not only by lending.
Hold the two apart in your head. Private lender describes where the money came from and who carries the risk. Credit provider describes who stands on the lender's side of the agreement. They are often the same party. They are frequently not.
04Where your return comes from, and what caps it
Your return is contractual interest. It is a number in a document, not a performance.
- It does not improve if the borrower's business does well. You were owed the same amount either way.
- It does not compound unless the agreement says so, and the two are quoted interchangeably by people who should know better. Lesson thirteen takes that apart.
- It stops at the agreed rate. There is no upside beyond it.
- Where the National Credit Act applies, the rate is capped by regulation, and the cap depends on the type of agreement.
You do, however, rank ahead of the owners. If a borrower business fails, money owed to lenders is dealt with before anything reaches the shareholders. That ranking is the real benefit of being a creditor — and lesson eight explains why ranking ahead of the owners is not the same as ranking first.
05The question to ask next
Before anything else, on any arrangement put in front of you: whose name is on the lender's side of the loan agreement?
If it is yours, you are the lender and probably the credit provider. If it is a company's, you are funding a lender, and your claim is against that company rather than against the borrower.
Those are two different positions with two different sets of rights. Next we map all four of them.