Commercial Development & Construction Finance
Finance for developers, investors and businesses constructing commercial premises. Plan funding for the site, construction and the sale or refinance of the completed property.
$10.58 Million Service Centre Construction Funding
The Brokerage arranged funding for a service-centre development in regional NSW, with tenant commitments from BP, KFC and ASX-listed food and beverage operators.
Our involvement covered three stages:
- Site acquisition funding before the development application was lodged.
- Construction finance to complete the project.
- Commercial investment finance upon completion.
The transaction included a $10.58 million facility through a credit union at 68% LVR on completion.
Case study published April 2024.
Commercial Construction Finance for Your Project
The Brokerage helps developers, commercial property investors and business owners assess funding for new commercial buildings, substantial redevelopments and extensions.
You may be preparing to acquire a site, finalising approvals, negotiating a construction contract or reviewing an existing facility.
We help establish what the project needs, which lenders may consider it and what must happen before funds can be accessed.
What Types of Commercial Projects Can Be Funded?
Commercial building loans can support projects such as:
- Retail premises, shopping precincts and showrooms.
- Offices and professional premises.
- Warehouses, factories and industrial units.
- Medical centres and healthcare premises.
- Childcare centres.
- Service centres and fuel stations.
- Substantial extensions or redevelopment of existing commercial buildings.
The property’s proposed use, location, construction requirements and market demand influence the available funding options. Specialised premises may require additional valuation and operational assessment.
Build to Sell, Lease or Occupy
The intended outcome should shape the finance from the beginning.
| Your objective | What the funding needs to address |
|---|---|
| Develop and sell | Expected sale proceeds, settlement timing and the lender’s requirements for releasing each property from its security. |
| Develop and retain | Leasing, completed value and the ability to refinance the construction debt into an investment facility. |
| Construct your own premises | Construction costs and the operating business’s ability to support the proposed longer-term debt. |
A completed building does not automatically qualify for investment finance. The proposed repayment or refinance needs to be assessed before the construction facility expires.
Site Acquisition and Existing Land Debt
If you have not purchased the site, the first step is to assess acquisition funding alongside the proposed development.
If you already own it, we review the existing debt, available equity and any conditions affecting a move into construction finance.
An acquisition facility does not necessarily include approval to commence construction. The construction stage may require a separate assessment, valuation and satisfaction of funding conditions.
What Costs Can the Facility Cover?
Depending on the lender and approved budget, commercial development finance may include:
- Site acquisition or repayment of existing land debt.
- Demolition, site preparation and civil works.
- Building construction and service connections.
- Professional fees and authority charges.
- Approved landlord works and tenant contributions.
- A construction contingency.
- Interest and finance costs.
Your feasibility should identify which costs the lender will fund and which you must pay separately. Include the timing of GST payments and credits with your accountant’s input.
What Lenders Assess
Commercial construction lenders assess the project and the people responsible for delivering it.
Key considerations include:
- Your development experience and financial position.
- The site, approvals and proposed use.
- Construction costs and delivery risks.
- The builder and project team.
- Your equity contribution.
- Sales, leasing or business-income assumptions.
- The completed property’s value.
- A credible repayment or refinance plan.
A strong submission explains how the project will be completed and how the debt will be repaid, with supporting evidence.
Preleases, Tenant Commitments and Presales
For a commercial investment development, lenders may examine the proposed tenants, lease terms and expected rental income.
Relevant information can include:
- Executed leases and agreements to lease.
- Tenant financial strength and trading history.
- Lease commencement and completion conditions.
- Rent-free periods, incentives and landlord works.
- The amount of space still to be leased.
For developments being sold, the assessment may instead focus on qualifying presales, purchaser deposits and settlement conditions.
Not every commitment will be accepted on the same basis. We review what evidence a proposed lender requires and whether the project can proceed with its current level of commitment.
Your Builder and Construction Contract
The builder’s experience and capacity are part of the funding assessment.
Lenders may review comparable projects, financial capacity, current workload, licensing and insurance.
The construction contract also needs careful review. Price exclusions, provisional sums, variations and completion provisions can change the amount of money required to finish.
A fixed contract price should be considered alongside what that price actually includes.
Feasibility, Contingency and Cash Flow
The feasibility needs to show more than a profitable result at completion. It should explain how costs will be paid throughout the project.
Allow for construction, professional fees, authority charges, finance costs, contingency and any leasing or selling expenses.
Test what happens if:
- Construction costs increase.
- Completion takes longer.
- Leasing or sales take longer than expected.
- Rental income or sale proceeds are lower.
- The completed valuation is below expectations.
These scenarios help identify whether additional equity, a different facility or changes to the project are needed.
How Much Can You Borrow?
The available loan depends on the lender’s assessment of value, costs, project risk and your financial position.
Two common measures are:
Loan-to-value ratio — LVR
The loan as a percentage of the lender’s accepted property value. Confirm whether the assessment uses the current site value or the value on completion.
Loan-to-cost ratio — LTC
The loan as a percentage of the development costs accepted by the lender.
Neither measure alone confirms your borrowing capacity. Other conditions, including tenant commitments, available equity and repayment capacity, may reduce the amount offered.
Equity and the Money Available for Construction
Your contribution may include cash and equity already held in the site, subject to lender acceptance.
It is important to distinguish the total facility limit from the funds available to pay construction costs.
Repayment of existing debt, establishment costs and interest allowances may use part of the facility.
Before proceeding, establish:
- How much equity you must contribute.
- When that contribution must be paid.
- Which costs sit outside the facility.
- How much remains available for the works.
How Construction Drawdowns Work
Many commercial construction facilities release funds progressively against approved claims.
Where required, a quantity surveyor assesses completed work, variations and the remaining cost to complete. The lender then considers the drawdown under the facility conditions.
The builder’s payment schedule and the lender’s release process need to work together.
Some facilities use different funding arrangements, including upfront advances. We review the actual drawdown conditions so you understand when money can be accessed.
Interest, Fees and the Loan Term
Compare the total cost and conditions of the facility alongside the interest rate.
Depending on the structure, costs may include establishment fees, line fees, valuation, legal expenses, quantity-surveyor reports and extension charges.
Interest may be paid during construction, capitalised within the facility or retained upfront. Each arrangement affects your cash requirements and available funds differently.
The proposed term should allow for construction, certification, tenant handover and the planned sale or refinance. Any extension remains subject to the lender’s agreement.
$5.144 Million Retail and Fast-Food Construction Loan
A client required finance to develop a corner-block site in Ulladulla, NSW, into a retail store and two fast-food restaurants.
The project had a signed lease with BCF and two agreements to lease with major fast-food tenants.
The Brokerage arranged:
- Loan amount: $5,144,000.
- Gearing: 76% of total development costs and 67% LVR.
- Lender: Credit union.
Case study published October 2022. Figures relate to this individual transaction.
Completion, Certification and Tenant Handover
Physical completion may be followed by certification, authority sign-offs, service connections, tenant works and lease commencement requirements.
These milestones can affect final payments, rental income, sales settlements and refinancing.
Your funding programme should identify the steps between finishing construction and receiving the money required to repay the facility.
Refinancing Into a Commercial Property Loan
If you intend to retain the property, the longer-term finance needs to be considered during the construction assessment.
For an investment property, the proposed lender may assess leases, net rental income, tenant strength, valuation and the borrower’s financial position.
For owner-occupied premises, the operating business’s financial performance and debt commitments become central.
We help assess the proposed refinance so the construction loan and longer-term funding work towards the same outcome.
Existing Projects and Completion Finance
If construction has commenced or your current facility is approaching expiry, we can review the remaining funding requirement.
The starting point is the project’s current position:
- Debt outstanding and funds still available.
- Work completed and verified cost to complete.
- Unpaid claims, variations and other liabilities.
- Builder arrangements and revised programme.
- Current leasing, sales and repayment prospects.
A change of lender may involve additional costs and conditions. The assessment needs to establish whether a replacement facility can fund the remaining work and provide a workable exit.
Documents to Prepare
The exact requirements depend on the project and lender. Common starting documents include:
- A project summary and funding request.
- Site details, ownership and existing debt.
- Development approvals and relevant plans.
- Feasibility, budget and cash-flow forecast.
- Construction contract and programme.
- Builder details and relevant experience.
- Leases, agreements to lease or sale contracts.
- Borrower financial statements, assets and liabilities.
- Details of your contribution and proposed repayment.
For a project already underway, include the latest progress reports, claims, variations and cost-to-complete information.
You can speak with us before every document is ready. We will identify what is needed for the next stage.
How The Brokerage Helps
1. Understand the project
We review the site, proposed works, budget, timing and intended outcome.
2. Assess the funding requirement
We identify the debt, contribution, construction cash requirements and proposed repayment.
3. Approach suitable lenders
We prepare the funding submission and compare available structures, costs and conditions.
4. Work through approval and settlement
We help coordinate the finance requirements with you, the lender and relevant advisers.
5. Support the next funding stage
We help plan the transition through construction and towards sale or longer-term finance.
Commercial Construction Finance FAQs
Yes. An early discussion can help assess acquisition funding and the likely construction requirements. Access to construction funds will depend on the approvals and other conditions required by the selected lender.
Requirements vary. The assessment depends on the property, leasing market, gearing, borrower strength and repayment plan. We can review your current commitments and identify what lenders may require.
Yes, subject to assessment. The funding needs to account for construction and the business’s ability to support the proposed debt after completion.
Potentially. The lender will assess the site value, existing debt and how much equity it will recognise. You may still need cash for upfront or excluded costs.
Some facilities allow interest to be capitalised or retained within the approved structure. This uses part of the facility and needs to be allowed for in the funding calculation.
Timing depends on the project, lender and completeness of the submission. Valuation, construction review, leasing evidence and legal documentation can all affect progress. An indicative offer is a separate stage from approval, settlement and access to funds.
Discuss Your Commercial Development
Planning a new commercial building, redeveloping an existing property or reviewing construction funding?
Tell us the site location, proposed use, estimated costs, current approvals and whether you intend to sell, lease or occupy the completed premises.
Our Brisbane and Sydney team can discuss your project and funding requirements across Australia.
Call 0451 973 662 Email enquiries@thebrokerage.au