What this covers
Different money, different rules, different conversation. Commercial and development lending isn't residential lending with bigger numbers — the lenders assess it differently, the documents are negotiated rather than standard, and the deal either stacks up on the figures or it doesn't.
- Commercial property — retail, office, industrial and warehouse, whether you're occupying it or holding it as an investment.
- Land subdivision and development — from a two-lot battleaxe through to multi-stage residential estates.
- Construction — single builds, townhouse sites, and residual stock facilities once a project is complete.
- Bridging and short-term — where timing between a purchase and a sale doesn't line up.
- Business and asset finance — equipment, vehicles, plant, and working capital facilities.
How a development deal is actually assessed
Residential lending asks whether you can afford the repayments. Development lending asks a different question: whether the project pays for itself. These are the numbers that decide it.
Total development cost
Land, construction, professional fees, council contributions, holding costs, interest, contingency. Lenders size the facility against this figure, and the single most common reason a submission goes back is a contingency allowance that a credit team doesn't believe.
Gross realisation value
What the finished product sells for, supported by a valuation from a lender-appointed valuer rather than your own view of the market. The gap between total cost and gross realisation is the project margin, and lenders have a level below which they simply won't proceed.
Presales and debt cover
How much of the project is sold before a shovel goes in the ground, and how well those sales cover the debt. Bank and non-bank appetites differ substantially here, and it's often the point where a deal moves from one type of lender to another.
Equity and where it sits
What you're contributing, when it goes in, and whether it's cash, land equity or something the lender will treat as neither. Senior debt, mezzanine and preferred equity all price differently and sit in a defined order if things go wrong.
Drawdowns and the quantity surveyor
You don't receive development funding in a lump. It's drawn progressively against work completed and certified, usually by a quantity surveyor appointed by the lender. Getting the drawdown schedule to match your builder's payment claims is unglamorous and it is where projects run into cashflow trouble.
The exit
How the facility is repaid — sales, refinance to a term facility, or a residual stock loan while the last units move. Lenders want the exit mapped before they fund the start, and a project with a vague exit is a project that gets declined.
What you'll need to put in front of a lender
- A feasibility study with realistic costings, not aspirational ones.
- Development approval or a clear path to it, with any conditions identified.
- Builder details, the contract type, and a fixed-price build wherever possible.
- Your track record on comparable projects, or a team around you that has one.
- Financials for the borrowing entity and the people behind it, plus a schedule of existing commitments.
- A valuation on an as-is and an as-if-complete basis, instructed by the lender.
- Presale contracts, where the structure calls for them.
If some of that doesn't exist yet, that's normal and it's a reason to have the conversation earlier rather than later. The worst position is a site under contract with a settlement date and no funding pathway.
A project I've funded
[[ Lake Coogee Estate case study goes here. Send me the detail and I'll write it up: what the project was, the structure, what made it difficult, and how it was resolved. Note that if the borrower is identifiable, written permission is required before it can be published — that's a licensee requirement, not just good manners. ]]
Commercial lending works under different rules
Worth understanding before you start. The National Consumer Credit Protection Act covers credit taken out for personal, domestic or household purposes. Lending for a genuine business or investment purpose generally sits outside it.
In practice that means fewer statutory protections, no standard-form contract to fall back on, and terms that are negotiated deal by deal. Default interest, review clauses, what you are personally on the hook for if the borrowing entity can't pay, and cross-collateralisation are all live issues in commercial documents in a way they aren't in a standard home loan. Read what you sign, and have a solicitor read it too.
It also means the Best Interest Duty that governs my consumer lending work doesn't automatically extend to a commercial facility. I'll work the same way regardless — position first, numbers second, product last — but you should know where the statutory line falls rather than assume it covers everything.
Where a loan is for business purposes, you'll be asked to declare that purpose. That declaration matters. Don't sign one that isn't accurate.
Where to start
Bring me the feasibility, or the back of the envelope it's currently written on. An early conversation costs nothing and it's far cheaper than discovering a funding gap after you've committed to a site.