In one sentence
A private lender is somebody who lends money and earns the interest as it is repaid. Not a bank. Not an investor buying shares. A lender — the person the borrower pays back. In South Africa you are allowed to do it, and you do not need a licence to do it.
Most people have never been told this is something an ordinary person can do. It is. What follows explains what a private lender actually is, what the law says, who borrows the money, and what it pays. It is written for somebody starting from nothing, and it asks you to decide nothing at the end of it.
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01 — The idea
There is a third place to put money
Most people know two. A bank, which pays them very little. Or the market, which pays them whatever it feels like that year. There is a third, and it is the oldest one of all.
When you put money in a bank, the bank lends it out to somebody else and keeps most of the difference. Private lending removes that middle step. The capital goes into the loan, and the interest comes to the person who provided it.
That is the whole idea, and it is what makes private lending different from almost everything sold alongside it: you are lending, not buying. There are no share prices to watch and nothing to check every morning. What matters is simply that the loan is repaid — which is why who borrows it, and what stands behind it, matter more than anything else on this page.
A bank
You deposit
The bank lends your money on and keeps most of the difference. Safe, available on demand, and it pays accordingly.
The market
You buy
You own a share of something and hope it is worth more later. The return depends on a price somebody else sets.
Private lending
You lend
Your capital is lent to a borrower who repays it with interest. The interest is the return. Nothing has to go up.
The trade is straightforward. A lender gives up the upside — a borrower who does extremely well still only repays what was agreed — in exchange for a return that does not depend on anyone doing extremely well.
02 — The law
Are you even allowed to lend money and charge interest?
Yes. This is the question that stops most people, because the first answer they find sounds like a closed door. It is worth understanding why it is not.
Look this up and you will be told that anybody lending money at interest must register as a credit provider under the National Credit Act. That is true, and it is also not the whole sentence.
The Act regulates who may grant credit. The registration obligation attaches to the party whose name is on the credit agreement with the borrower — the one doing the lending. It does not attach to a person who provides the capital that gets lent.
You
Provide capital, for an agreed term and rate — no registration
Credit provider
Grants the credit and administers the loans — must hold an NCRCP number
Borrower
Uses the money and repays it with interest
The test
The licence requirement follows the lending, not the money
This is not a loophole, and it is not new. It is how nearly all lending in the country already works. When you deposit money at a bank, the bank lends it on — you do not become a credit provider by having a savings account.
What else the law does
The same Act caps what a borrower can be charged, so rates are not left to agreement. And a rule of South African law called in duplum stops interest running once the unpaid interest equals the outstanding capital — a debt cannot quietly double through arrears and keep growing.
Lending here is not unregulated. It is permitted, and bounded — which is a considerably better position than either extreme.
03 — The return
Every rand you earn comes out of a repayment
That single fact explains almost everything else about private lending — including why the borrower matters more than the rate.
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. Nothing about the arrangement depends on a market moving, a valuation rising, or a buyer being found later.
What sets the rate
The cost of money
Prime
In South Africa the anchor is the prime lending rate, which moves with the Reserve Bank’s repo rate. When prime moves, lending rates move with it.
What stands behind it
Security
A loan with something solid behind it costs the borrower less. Security does not make repayment certain — it changes what happens if repayment fails.
Who is borrowing
The borrower class
A borrower class that reliably repays pays less than one that does not. This does the most work and gets the least attention.
How the money actually reaches you
Most arrangements pay interest periodically — commonly monthly — with the capital returned at the end. That shape is why private lending is so often reached for by people who want income rather than growth: it produces a payment, not a number on a statement.
Two things follow from that. The return is income, taxed as interest rather than as a capital gain or a dividend. And it stops — when the loan is repaid the arrangement ends, and capital that is not placed again is not earning.
The honest limit. Because the return is a repayment, it is not guaranteed the way a bank deposit is. It is a conservative, secured arrangement rather than a market bet — but nobody can promise you a lending return, and anybody who does is telling you something untrue.
04 — The borrower
Who is actually borrowing — the question almost nobody asks
If the return is a repayment, then who repays determines everything. It is the first thing to ask about any lending arrangement, and it is usually the last thing anyone mentions.
A good answer names a specific class of borrower with a specific reason to need money and a specific source of repayment. “Businesses” tells you nothing. A named class tells you what the debt is, why it exists, and where the money to repay it comes from.
In ProLend’s local environment the borrowers are mostly blocks of flats and housing estates — community schemes — paying for repairs, maintenance or upgrades, and repaying from the levies their owners already pay every month.
That is worth sitting with, because it is unglamorous in exactly the right way. The money is not funding a venture that may or may not work. It is funding a roof, a lift, a security upgrade — on a building whose owners are already paying levies every month, and whose obligation to pay them is not optional.
There is also no fixed end date
A scheme might repay in a few months or take a few years. That is the genuine trade-off in the local route, and it should be said plainly: this is money you leave to work, not money you draw on. If you may need it at short notice, it does not belong here.
The four questions
- 01
Who are they?
A named class of borrower, not a category.
- 02
Why do they need the money?
A specific, repeatable reason.
- 03
How do they repay?
From what income, on what schedule.
- 04
What happens if they do not?
What stands behind it, and who enforces it.
05 — The returns
What it pays: two routes, and they behave differently
One stays in rands and moves with South African interest rates. The other is held in hard currency at a rate fixed for the term. Neither is better — they answer different questions.
ZAR · Local
Local
11.5% – 15.5%
A year · indicative, at today’s rates
Your money stays in rands. The rate is tied to South Africa’s prime rate — if rates go up your return goes up, and if they come down, it comes down too. There is no fixed end date.
GBP / USD / EUR · Offshore
Offshore
12% – 16%
A year · fixed for the term
Held in pounds, dollars or euros at a set rate that does not move during the term. You know the number before you start. Because it is in another currency, the exchange rate also affects what it is worth back in rands.
The arithmetic, on your own number
There is nothing complicated to model. Capital multiplied by the rate is the annual interest; divide by twelve for a monthly figure. If the interest is paid out rather than reinvested, there is no compounding to argue about.
What comes off. A quoted rate is a gross rate. Interest is taxable income at your marginal rate, subject to the annual interest exemption — it is not a dividend and not a capital gain. And capital that is between placements is not earning. Neither is a hidden cost; both are arithmetic worth doing before making plans around a number.
06 — The starting line
How much money do you need to be a private lender?
This is the question people ask before they ask anything else, and the honest answer has two halves.
The law sets no minimum. There is no threshold in the National Credit Act, no accreditation test, and no net-worth requirement to place capital as a private lender in South Africa. Nothing in the legislation says a person must have a certain amount of money before they may lend some of it.
Individual arrangements set their own. A minimum is a commercial decision by whoever administers the lending, not a legal one, and it exists for a practical reason: the work of documenting, securing and administering a loan costs roughly the same whether the amount is small or large. Offshore notes, for instance, start at 10 000 units of the note’s own currency and move in multiples of 1 000. Local minimums are set by the arrangement and move from time to time, so the only reliable way to know the current one is to ask.
The more useful question is not the minimum but the commitment. Private lending is not a demand account. Capital is lent for a term, and in the local route there is no fixed end date at all. The right amount is money you can genuinely leave in place — which for most people is a smaller number than the maximum they could technically find.
07 — What it takes
Four things you need — and five you do not
The list of requirements is shorter than most people expect, and the list of things they wrongly believe are required is longer.
- 01
Capital you can commit
Private lending is not a demand account. The money is lent for a term. Do not place money you may need next month.
- 02
A registered credit provider
Ask for their NCRCP number and look it up at ncr.org.za. Two minutes, and the single most useful thing you can check.
- 03
Your FICA documents
Identity, proof of address, proof of bank account, and where the funds came from. An operator who does not ask for these is the one to worry about.
- 04
A written agreement
What your capital is used for, what you are owed, when, and what happens on a default. Read it before you commit, or have it read.
What you do not need
A credit provider registration
It follows the granting of credit, which the operator does — not you
An FSP licence
That governs giving advice, not placing capital
A financial qualification
There is no competence requirement to be a lender
A company or a trust
An individual can place capital directly. So can a trust or a company
And no minimum net worth. Arrangements set their own minimums; the law sets none.
08 — The structure
Where ProLend fits — we are not the lender
ProLend is a private-lending marketing and distribution platform in South Africa. It does not hold your capital, it does not lend, and it does not grant credit.
The lending is administered by BC Funding Solutions (Pty) Ltd — a registered credit provider, NCRCP 11132, and a licensed financial services provider, FSP 55147. That is the structure described in section two, named: you provide capital, a registered credit provider grants the credit, and the registration obligation sits with them.
You can check that number yourself, at ncr.org.za, before speaking to anybody. We would rather you did.
What a consultant does
ProLend’s consultants explain how the arrangements work and introduce clients. They are not financial advisers and they do not give advice. If you want a recommendation about your own circumstances, that is a conversation for a licensed adviser — and a good consultant will tell you so.
Keep a copy
Everything above, as a free eight-page PDF.
The printed booklet ProLend consultants leave behind after a meeting. Yours without asking anybody.
Frequently asked
Is private lending something an ordinary person can do in South Africa?
Where does private lending sit between a bank account and the stock market?
What are the four questions to ask about any lending arrangement?
What should I read first if I know nothing about private lending?
Can I download this guide as a PDF?
Is this guide financial advice?
Educational information only. Nothing on this page is financial advice or a recommendation, and it is not an offer to enter into any arrangement. Returns shown are indicative at today’s rates and are not guaranteed. Local returns are linked to the South African prime rate and will move as it moves. Offshore returns are in foreign currency and the exchange rate will affect what they are worth in rands. Capital is not guaranteed and private lending is not a bank deposit — there is no deposit insurance behind it. ProLend is a private-lending marketing and distribution platform and is not the lender. Lending is administered by BC Funding Solutions (Pty) Ltd, registered credit provider NCRCP 11132, FSP 55147.