Private Credit in Switzerland
Switzerland has one of Europe’s deepest and most sophisticated mortgage markets. For many borrowers, conventional Swiss bank financing remains the natural solution for long-term property ownership. Yet there are transactions in which the issue is not the fundamental quality of the asset or borrower, but whether the financing requirement fits the timetable, underwriting criteria or structure of a conventional institution.
An entrepreneur may need liquidity against a Swiss asset while completing a transaction elsewhere. An investment property may be undergoing repositioning before longer-term refinancing. Existing debt may need to be replaced before another liquidity event occurs. A company may own substantial Swiss real estate but require capital for an acquisition, shareholder transaction or temporary business requirement.
Private credit can potentially address this gap by assessing the financing around the individual transaction rather than forcing every case into a standard mortgage product. But Switzerland should not be mistaken for an informal lending environment. Property rights, mortgage security, the Land Register, valuation, borrower affordability and — for international ownership in particular — the Lex Koller can all materially influence whether a proposed structure works.
That distinction is especially important for international clients. A valuable property in Geneva, Zurich, Lausanne or another Swiss market may appear to provide obvious collateral, but the financing cannot be properly assessed until the lender understands who owns the property, who controls the owner, what security already exists, what can legally be pledged and how the facility will ultimately be repaid.
When Private Credit Becomes Relevant in Switzerland
The strongest private-credit cases generally have a clearly identifiable reason for requiring temporary or individually structured capital.
Consider an entrepreneur whose wealth is concentrated in a Swiss property portfolio but who needs liquidity to complete an overseas acquisition. Selling a Swiss asset simply to meet a temporary requirement may be commercially unattractive. Equally, a borrower refinancing an investment property may need an interim facility while a longer-term financing structure is prepared.
Property companies can encounter similar situations during acquisition, redevelopment or repositioning. The current asset may not yet satisfy the criteria of the institution intended to provide permanent financing, even though the borrower has a credible plan for reaching that position.
Private credit can therefore act as transitional capital between two stages of a financial strategy.
That flexibility does not mean that private lenders ignore leverage or repayment capacity. FINMA continues to identify credit-default and property-valuation risk as major issues within the Swiss mortgage market and has emphasised conservative valuation and risk-appropriate loan-to-value policies, particularly for investment and commercial properties.
The private-credit analysis may be different from conventional bank underwriting, but the fundamental questions remain serious: what is the collateral worth, how enforceable is the security, what other debt exists and what credible event will repay the facility?
“In Switzerland, a valuable asset is only the beginning of the credit analysis. Ownership, mortgage security, valuation and the legal ability to execute the structure must all support the same transaction.”
Swiss Mortgage Security and the Schuldbrief
One of the distinctive features of Swiss property financing is the importance of the Schuldbrief, known in French as the cédule hypothécaire and commonly described in English as a mortgage note.
This is one of the areas where a Swiss financing transaction can look materially different from a property-backed loan structured in the United Kingdom, France, Spain or Portugal.
Rather than thinking simply in terms of “putting a charge on the property”, the lender and its legal advisers need to understand the mortgage security already associated with the asset, its amount and ranking, and how the proposed financing will interact with the existing position.
The Land Register — Grundbuch / registre foncier — therefore becomes an essential part of the transaction. It provides the legal record against which rights relating to Swiss real estate are established and examined. Mortgage rights are not merely a commercial detail between lender and borrower; the real-estate security needs to function within this formal property-law framework.
Existing mortgage notes can also matter when a property changes lender or is refinanced. Consequently, a borrower who says that a property is “mortgage free” or has substantial equity still needs the legal position to be checked. The economic debt and the mortgage instruments surrounding the property are related questions, but they should not simply be assumed to be identical.
For private credit, the lender therefore needs to understand the property, existing debt, available mortgage security and ranking together before determining how much capital can responsibly be advanced.
Lex Koller Can Change the Transaction Before Financing Even Begins
For international clients, one of the most important Swiss-specific considerations is the Lex Koller, formally the Federal Act on the Acquisition of Immovable Property in Switzerland by Foreign Non-Residents.
The legislation restricts certain acquisitions of Swiss real estate by persons abroad. The Federal Office of Justice confirms that it can apply not only to foreign nationals but also to companies domiciled outside Switzerland and Swiss companies controlled by persons abroad. Transactions falling within the regime generally require authorisation from the competent authority of the canton where the property is situated, subject to the applicable exemptions.
This makes simplistic advice such as “just put the Swiss property into a Swiss company” potentially dangerous.
A company being incorporated in Switzerland does not automatically remove the Lex Koller issue if that company is ultimately controlled by persons considered to be abroad under the legislation. The ownership and control behind the vehicle matter.
The nature of the property matters too. The Federal Office of Justice identifies an important exemption for property used as a permanent business establishment. Commercial premises such as offices, factories, shops, restaurants and other qualifying operational properties can generally be acquired by a person abroad without Lex Koller authorisation under this exemption. The federal guidance also makes clear, however, that simply constructing, renting or trading residential accommodation is not treated in the same way as an operating commercial establishment.
That distinction can be decisive for international investors.
A foreign-controlled company acquiring an operational commercial property may therefore face a very different Lex Koller analysis from the same investor attempting to acquire Swiss residential investment property. Holiday residences, secondary homes, development land and mixed-use situations can introduce further questions, while cantonal rules and the facts of the individual transaction also matter. The competent cantonal authority ultimately determines whether a particular transaction requires authorisation.
There is an additional reason for being careful with this subject in 2026. The Federal Council has proposed further restrictions to the Lex Koller, including changes affecting certain residential acquisitions and holiday homes. Those proposals went through consultation in 2026; they should not be confused with the law currently in force.
For private credit, the implication is straightforward: the legality and ownership structure of the underlying Swiss asset must be understood before designing financing around it.
Valuation Is About Lending Value, Not Aspirational Value
Swiss real estate can command extremely high prices, particularly in Geneva, Zurich, Zug, Lausanne and certain resort markets. But a high market price does not automatically justify equally aggressive secured lending.
A lender looks at an asset through the perspective of recoverable collateral value, not simply the owner’s perception of wealth.
FINMA has repeatedly highlighted property-valuation risk within the Swiss mortgage market. Its supervisory work has identified weaknesses in valuation practices and emphasised that institutions need documented methodologies and properly validated valuation models. It has also advised more conservative lending parameters for investment properties because their risk profile differs from owner-occupied residential property.
For an income-producing building, rental income, vacancy, operating expenses, location and capitalisation assumptions can materially affect valuation. For a development or repositioning transaction, the lender also needs to distinguish between the property’s present condition and a projected value that depends upon works still being completed.
That distinction is critical in private credit. A borrower may present an expected future value of CHF 10 million, but if reaching that value requires another twelve months of construction, leasing or regulatory work, the lender is not currently secured against the finished business plan.
The financing needs to account for the asset that exists today, the work required to reach tomorrow’s value and the risk that the transition takes longer than expected.
Due Diligence and Transaction Costs Can Precede Funding
An indicative financing proposal is not the same as completed capital.
Once a transaction reaches serious underwriting, several workstreams may need to progress before funds can be released. Depending on the case, these can include valuation, Land Register review, corporate due diligence, analysis of existing mortgage security, preparation or transfer of the relevant security instruments, legal documentation and verification of the proposed repayment route.
International structures can add another layer. If a Swiss company owns the asset but its shareholders reside abroad, the lender may need to understand beneficial ownership and control, source of funds or wealth where relevant, corporate authority and any Lex Koller implications. If repayment is expected from another jurisdiction, that source of liquidity also needs to form part of the credit analysis.
Professional costs can consequently arise before completion.
There is nothing inherently suspicious about a borrower being asked to fund genuine valuation, legal or other third-party work necessary to progress a transaction. Equally, a borrower should never assume that every request for an advance payment is legitimate simply because it is described as a financing fee.
The relevant questions remain practical: Who receives the money? What professional or contractual work does it pay for? What do the written terms say? What happens if the transaction does not complete?
There is no universal Swiss private-credit fee sequence applicable to every lender and every transaction. Sutterson Reed therefore treats pre-completion costs as something to be understood and explained within the particular mandate rather than presenting arbitrary fixed charges as an industry rule.
International Borrowers Require More Than a Swiss Property
A substantial proportion of the clients capable of owning high-value Swiss assets have financial affairs extending beyond Switzerland. Their residence, operating businesses, holding companies, investments and banking relationships may be distributed across several jurisdictions.
That can create precisely the sort of case in which private credit becomes useful — but it also means that the lender needs to understand more than the collateral.
Imagine an entrepreneur resident outside Switzerland with an interest in a Swiss commercial property, an operating company elsewhere in Europe and a temporary capital requirement arising from an acquisition. The Swiss property may provide the security, while the economic reason for borrowing and eventual source of repayment sit elsewhere.
Alternatively, an internationally mobile family may already own Swiss real estate but have a proposed ownership reorganisation that raises questions under the Lex Koller. In that situation, financing should not be arranged independently from the ownership analysis.
The correct question is therefore not simply “Can a foreigner obtain private credit in Switzerland?”
It is:
Who is borrowing, what Swiss asset is involved, how is it owned, what is the nature of that property, what security is available and where will repayment come from?
Once those questions are answered, lender selection becomes considerably more meaningful.
The Exit Strategy Determines Whether the Structure Works
Short-term capital should have a credible route back out.
A Swiss private-credit facility may be repaid through refinancing with a conventional institution, sale of the secured property, disposal of another asset, completion of a business transaction, receipt of investment proceeds or another identifiable liquidity event.
Each exit needs to be examined differently.
If refinancing is expected, the lender needs to understand why the borrower should qualify for that refinancing later if it is unavailable today. Perhaps construction will have completed, occupancy will have improved, accounts will show a stronger trading period or a corporate event will have simplified the structure.
If a sale is the exit, the relevant question is not merely the asking price. Market liquidity, realistic valuation and the time required to complete a Swiss property transaction all affect whether the proposed facility term provides sufficient room.
And if repayment depends on a transaction outside Switzerland, the lender needs to understand the probability and timing of that event rather than treating it as guaranteed future cash.
Private credit becomes dangerous when the borrower solves today’s liquidity problem by simply creating a larger deadline tomorrow. The exit is therefore part of the original credit structure, not something to consider shortly before maturity.
Why Sutterson Reed?
Sutterson Reed approaches Swiss private credit as part of the client’s wider financial architecture.
We begin with the objective: how much capital is required, why it is required, what Swiss asset may support the financing, how that asset is owned, what existing debt and mortgage security are present and what event is expected to repay the facility.
Where international ownership is involved, questions such as Lex Koller, corporate control and cross-border ownership need to be identified early rather than discovered after substantial time and money have already been committed to the financing process.
The financing mandate can then be coordinated alongside the relevant valuation, legal, security and due-diligence work required to move from an initial credit proposition toward completion.
For international entrepreneurs, companies and private clients, the objective is not simply to find someone willing to lend against an expensive Swiss property. It is to create a financing structure in which the capital, collateral, ownership, legal security and exit strategy actually work together.
Discuss Your Swiss Private Credit Requirements
Whether you are refinancing Swiss real estate, releasing liquidity from an existing asset, financing an acquisition or repositioning, replacing maturing debt or addressing a time-sensitive capital requirement, Sutterson Reed can assess the wider transaction and structure the financing around the intended outcome.
