Private commercial lending has a reputation problem. Borrowers often hear “private” and picture last-resort, expensive money — something to avoid unless the bank has already said no. In reality, private lending is a precision tool. Used in the right scenario, it closes deals the bank can’t, protects deposits the bank would forfeit, and unlocks profit a borrower would otherwise leave on the table. Used in the wrong scenario, it’s expensive capital with no clear way out.
The difference is knowing exactly when private lending makes sense — and structuring the exit before you sign the term sheet. At Max Capital Financial we arrange private commercial mortgages and private residential mortgages across Alberta and BC every week. This guide covers the scenarios where private wins, what private lenders actually care about, typical 2026 pricing, and — most importantly — how to plan the exit.
What private commercial lending actually is
A private lender is a non-bank source of capital — a mortgage investment corporation (MIC), a syndicated investor pool, or a high-net-worth individual — that lends against real estate on its own underwriting standards rather than the bank’s. Private lenders are asset-based. They lend on the property (and the exit) more than on the borrower’s tax returns, covenants, or two years of audited financials.
That fundamental difference is why private deals close in days rather than months — and why they cost more. Private capital trades rate for speed, certainty, and flexibility.
Six scenarios where private wins
1. The closing date won't move
You have an accepted offer with a 14- or 21-day close, and the bank is quoting 60 days minimum. Walking away means losing the deposit and the deal. A private lender can fund in 7 – 14 days against a clean appraisal and clean title — keeping the deposit safe and the deal alive. This is the #1 reason our phone rings.
2. The asset is non-conforming
Banks lend against a tight box: stabilized, income-producing, conforming use, established market. Outside that box — a vacant building awaiting a tenant, a property mid-conversion, an unusual use, raw or partially-zoned land, or a small-market asset — banks slow down or decline. Private capital doesn’t care about the box; it cares about the value and the exit.
3. The borrower's file is "messy" right now
Self-employed income that hasn’t shown up on tax returns yet, a recent corporate restructure, a tax assessment in dispute, a credit blip, or a partner buyout — any of these can stall a bank file for months. A private lender underwrites the property and the exit, not the borrower’s last two T1s. Once the file cleans up, you refinance to a bank take-out.
4. You need to move fast on opportunity
An off-market property at a great basis, a forced-sale, an estate sale, an out-of-province vendor that needs to close — opportunities have expiry dates. Private capital lets you act while the bank is still requesting documents. The few extra points of interest over a 6 – 12 month hold are usually a rounding error against the discount you captured.
5. Bridge to a planned event
Bridging to a sale, a refinance, a stabilization, a CMHC MLI Select take-out, or a planned recapitalization is the bread-and-butter of private lending. The exit is clear, the timeline is defined, and private capital fills the gap in between.
6. Construction or repositioning
Pre-construction land assembly, partial-completion bridges, construction-loan top-ups, or repositioning an underperforming asset before refinancing all sit naturally with private capital. Banks rarely fund the value-creation phase; they fund the stabilized result.
What private lenders actually underwrite
Every private lender we work with looks at three things, in this order:
Notice what’s not at the top: years of tax returns, debt-service-coverage tests against historical operating income, or covenant requirements. Those still matter, but they don’t drive the decision the way they do at a bank.
Typical 2026 private lending terms
LTV: typically 50 – 65% on commercial assets, occasionally up to 70 – 75% on strong files in primary markets
Rate: 8 – 12% on first mortgages, 11 – 15% on seconds, depending on asset, term, and risk
Lender fee: 1 – 3% of loan amount, payable on funding
Term: 6 – 24 months — short-term by design
Payments: often interest-only, sometimes pre-paid out of the advance
Funding speed: 7 – 21 days from clean term sheet to funded
Pre-payment: generally open after 3 – 6 months; some lenders offer fully-open structures with a small premium
Compared to a 6 – 7% bank rate, private looks expensive on paper. On a 12-month bridge against a $2M loan, the spread is roughly $40,000 – $80,000 of additional interest. That spread is almost always smaller than the deposit at risk, the discount captured, or the opportunity cost of waiting another 90 days for the bank.
Plan the exit before you sign
The single most important decision in private lending isn’t the rate — it’s the exit. A private mortgage with no realistic exit becomes a renewal, then another renewal, then a workout. Every private file we structure has the exit baked in from day one. The four clean exits:
Exit 1: Refinance to a bank or insurer
Most common. The private mortgage holds the asset while the borrower cleans up the file, builds a year of operating history, completes a renovation, or finishes lease-up. At maturity, a conventional commercial mortgage or refinance takes the private out.
Exit 2: Sale
The private lender funds an acquisition, repositioning, or hold while the property is prepared for sale. The exit comes from the closing. This works as long as the sale timeline is honest — most “6-month” sale plans take 12, so size the term accordingly.
Exit 3: Stabilization to CMHC take-out
On multifamily and select asset classes, the private bridge funds construction completion or lease-up, and a CMHC MLI Select take-out funds at stabilization at significantly lower rates and longer amortization. This is one of the highest-leverage uses of private capital in Western Canada today.
Exit 4: Recapitalization
A new equity partner, a partner buyout, an estate settlement, or an internal restructuring repays the private. Cleanest when the recap is already documented and papered.
Common mistakes to avoid
Treating private as cheap money: price reflects risk and speed; budget for the full cost including lender fee and broker fee, not just the rate
No real exit: “I’ll refinance somewhere” is not an exit — name the lender and the criteria you’ll need to meet
Term too short: a 6-month term on a 9-month plan forces a renewal at the worst time; size the term to your worst-case timeline plus 3 months
Stretching LTV: private lenders that quote 75 – 80% LTV on a commercial bridge often re-trade after the appraisal — use a realistic LTV from the start
Ignoring the take-out lender’s criteria today: the take-out is what matters; structure the bridge so the property and file qualify for it on day one of maturity
Going direct to a single private lender: rates and terms vary widely — a brokered process keeps lenders honest and gets the deal done at market
Where private lending fits in Western Canada right now
We’re seeing strong private capital appetite across our markets in 2026:
Edmonton and
Calgary — quick-close acquisitions and multifamily bridges to MLI Select are dominating volume
Vancouver — land-banking and pre-development bridges remain active despite the broader slowdown; private fills the gap banks won’t
Kelowna and
Victoria — repositioning and value-add bridges on tight-market assets
Red Deer and secondary Alberta markets — private steps in where banks see “small-market” risk; well-structured files still attract competitive private capital
How Max Capital structures private deals
We don’t represent a single lender. We have direct relationships with MICs, syndicated pools, family offices, and private investors across Western Canada — which means we can run a competitive process and bring back two or three live term sheets on most files within 48 hours. Every term sheet we present already has a documented exit plan, so the decision is made on full-cycle cost, not just the headline rate.
No deposits. No fees until funded. Whether you need a 14-day close or a 12-month bridge to a CMHC take-out, send us the deal and we’ll come back with a structured plan and live terms.
Need to close fast?
Send us the property, the timeline, and the exit. We’ll come back with live private term sheets within 48 hours.
