In short
Private capital reaches a borrower in one of four positions: you make the loan, you buy the rights to an existing one, you lend to a business that lends, or you invest in a fund that lends.
Which one you are in decides who owes you money. That is the question — not what the arrangement is called, and not who did the work of arranging it.
01The four positions
There are only four. Anything you are shown is one of them, or a combination of them wearing a new name.
| The position | What you hold | Who owes you |
|---|---|---|
| Make a loan to a borrower | A loan agreement in your own name, and any security registered in your favour | The borrower |
| Buy the rights to loan repayments | Rights to repayments on a loan that already exists, transferred to you | The underlying borrower, once the transfer is properly completed |
| Lend to a lending business | An agreement with that business — often a note or a debenture | That business. Its borrowers owe it, not you. |
| Invest in a fund that lends | An interest in the fund: a unit, a share or a participatory interest | Nobody owes you the loans. You hold an interest; the fund holds the loans. |
Read the third column down. In two of the four, your debtor is the borrower. In the other two, it is a business — and in the fourth, strictly speaking, nobody owes you the loans at all.
The Association sets all four out at length, with worked examples and the checks for each, at the four positions. This lesson is the map; that page is the territory.
02The roles, which are not positions
Several parties can be involved in one loan without any of them being your debtor. Their jobs are real and often valuable. None of them is a position.
| The role | What they do | What it does not make them |
|---|---|---|
| Originator | Finds the borrower and arranges the loan | The lender |
| Administrator or servicer | Collects payments, keeps the records, chases arrears | The creditor |
| Platform operator | Runs the website, the onboarding and the reporting | A party to your loan |
| Security trustee | Holds security for a group of lenders | The owner of your claim |
| Attorney | Draws the agreement, registers a bond, holds funds in trust | A guarantor of the outcome |
| Introducer or consultant | Brings the opportunity to you and helps you apply | Your lender, or your adviser |
So somebody else doing the work does not make them the creditor, and it does not stop you being one. A loan you own, administered by somebody competent, is still your loan — and a loan somebody else owns is not yours because you paid for it.
03Where there are two agreements, read both
Whenever capital reaches a borrower through a business, there are at least two agreements:
- Your agreement, between you and that business.
- The loan agreement, between that business and the borrower.
Each is assessed on its own. The second one can be excellent — well secured, properly registered, a strong borrower — and your position can still be weak, because your claim is against the business in the middle.
04How to establish it in practice
You do not need a lawyer for the first pass. You need the documents, and four questions you ask of them in order.
- Whose name is on the lender's side of the loan agreement? If it is not yours, you are not the lender on that loan.
- What does my own agreement say I am buying? The claim itself, a share of it, an interest in a vehicle, or a promise of a return from the party selling it.
- If something secures the loan, in whose favour is it registered? Security registered in a business's name is enforced by that business, not by you.
- Where does my money go, and from whose account am I paid? The payment trail usually tells you the structure faster than the covering letter does.
Write the answers down. Four short answers tell you which of the four positions you are in, and you cannot assess a risk you have not identified.
05None of the four is the right one
This lesson is not building towards a recommendation. Each position suits different people, and each fails differently.
Making the loan yourself gives you the most control and all of the work. Investing through a fund gives you diversification and someone else's judgement, at the cost of fees and of any say. The two in the middle sit between them, and they are where the paperwork matters most, because what you own depends entirely on what the document does.
What is never acceptable is not knowing which one you are in. Next: why there is anything to lend into at all.