What Is an Exit Strategy – And Why It’s Critical in Private Lending

Private loans are designed to be short-term, fast, and flexible. But just as important as getting the funding is how you're going to repay it — and that’s where your exit strategy comes in.

At Assurity Capital, we consider your exit strategy one of the most important parts of any deal. Here's why it matters — and what a strong exit looks like.

What Is an Exit Strategy in Private Lending?

An exit strategy is the clear, realistic plan for how you will repay the loan at or before the end of the loan term. Unlike traditional lenders that may rely on long-term principal and interest repayments, private lenders focus on how the loan will be repaid in full.

Because most private loans are short-term (usually 3 to 12 months), the exit strategy is crucial to responsible lending and deal approval.

Why Is an Exit Strategy So Important?

Private lending is typically interest-only or interest capitalised, with the full principal due at the end of the term. That means your ability to repay in one transaction or refinance is a key part of the risk assessment.

Without a clear and achievable exit strategy:

• The deal may not be approved

• The borrower may risk default

• The lender cannot responsibly provide funding

At Assurity Capital, we assess both the asset security and the viability of the exit — that’s what allows us to move quickly while still managing risk.

Common Types of Exit Strategies

Here are the most common and acceptable exits for private loans:

Refinance

Refinancing the loan with a bank or another lender once financials improve, equity increases, or development is completed.

Sale of Property

Selling the secured property or another asset to repay the loan.

Business Revenue

Using expected income or business cash flow to repay (must be well-substantiated).

Construction Refinance

Refinancing to a construction or development facility after planning approval or presales.

Inheritances or Settlements

Where large funds are due and documentation is available to verify timing.

What Makes a Strong Exit Strategy?

A credible exit plan should be:

• Specific – Include timing, process, and source of funds

• Evidence-based – Supply contracts, loan approvals, valuations, or sales agency agreements where applicable

• Aligned with the loan term – If the exit is 6 months away, a 3-month loan isn’t suitable

• Achievable – No wishful thinking; realistic and supported by documents

Examples of Exit Strategies We’ve Approved

• A borrower refinanced to a major bank after settling ATO debts using our loan

• A developer sold 3 townhouses on completion to exit a 2nd mortgage loan

• A business owner cleared a private loan after securing new long-term finance

• A property investor sold a regional residential block after securing DA approval

Need Help Structuring a Private Loan With a Clear Exit?

Whether you’re a borrower, broker, or referrer, Assurity Capital will work with you to structure a deal that’s achievable — and aligned to your goals. We assess scenarios quickly and always focus on a realistic exit strategy from day one. Contact us.