Business Construction Loans

A business construction loan provides finance for the construction, expansion or major improvement of commercial property used for business or investment purposes. Funding can cover eligible land, construction and associated project costs, with funds generally released progressively as construction milestones are completed.

Unlike a standard business loan where the full amount may be advanced upfront, construction finance is generally released in progress payments or drawdowns throughout the build. We assess the project, construction costs, property value, borrower contribution, business financial position and ability to service the debt, then compare suitable finance options across our panel of 80+ banks and non-bank lenders.

Business construction finance can potentially be used to build warehouses, factories, offices, retail premises, medical facilities, hospitality venues, industrial properties and other eligible commercial premises. It may also be available for substantial extensions, renovations and redevelopment projects.

Yes, subject to eligibility. Commercial construction finance can be used to build premises that your business will occupy once construction is complete, including offices, warehouses, workshops, factories and other commercial facilities.

Potentially. Depending on the project and lender, finance may be structured to fund the purchase or refinance of the land together with eligible construction costs. If you already own the land, the equity you hold in it may contribute towards the overall transaction.

Borrowing capacity depends on factors including the land value, construction costs, completed property value, your contribution or equity, business financial position, project feasibility and ability to service the debt.

There is no single deposit requirement. The required contribution depends on the property, project, completed value, borrower strength, experience and lender. Existing equity in the development site or another eligible property may also contribute towards the required equity.

Potentially. If you already own the development site and it has sufficient equity, that equity may form part of your contribution to the project, subject to valuation and lender requirements.

Loan-to-cost compares the amount being borrowed with the total eligible cost of the project. For example, if an eligible project costs $2 million and the lender provides $1.4 million, the LTC is 70%.

LVR compares the loan amount with the value of the property securing the finance. For construction projects, lenders may consider both the property's current value and its expected value once construction is completed.

GRV is the estimated total value of a development once completed, generally based on the expected sale value of the finished properties. It is particularly relevant to property development finance rather than straightforward owner-occupied commercial construction.

Rates vary depending on the project, loan amount, LVR or LTC, property type, borrower experience, financial position and overall risk. We compare rates, fees and structures across suitable lenders to help find competitive construction finance for your project.

Generally, interest is charged on funds that have been drawn rather than the entire approved construction facility from the beginning. The exact calculation and treatment of interest depends on the finance agreement.

Often, construction facilities are structured on an interest-only basis during the construction period. Depending on the facility, interest may be paid regularly or capitalised into the loan, subject to lender requirements and the approved funding structure.

Funds are generally released at agreed construction stages. Before each drawdown, the lender may require invoices, progress claims, quantity-surveyor reports, inspections or other evidence confirming that the relevant work has been completed.

Stages vary by project, but may include land or site works, foundations, structural construction, lock-up, fit-out and completion. Commercial projects are often funded against certified progress claims rather than the standard stages used for residential construction.

A fixed-price contract may strengthen an application and is required by some lenders or transactions because it provides greater certainty around construction costs. Other structures may be considered depending on the project, builder and borrower experience.

You can discuss finance before final approvals are obtained, but lenders will generally require the necessary planning, development and building approvals before construction funding can be fully drawn.

Usually. The lender will generally require an acceptable valuation of the property and may assess both the current land value and the property's expected value once construction is complete.

Potentially. Larger or more complex construction projects commonly require an independent quantity surveyor to review the construction budget, confirm progress and monitor costs throughout the project.

Potentially, but lenders generally expect an appropriate contingency to be included in the original project budget. If costs increase during construction, additional funding isn't guaranteed and may require a new assessment.

Yes, subject to approval. Commercial construction finance can be used to build warehouses, factories, workshops and other industrial premises for owner-occupation or investment.

Yes. Eligible office, retail and mixed commercial construction projects may be financed, subject to the project, location, costs, expected value and borrower circumstances.

Potentially. Depending on the project, construction finance may cover certain eligible fit-out costs. Equipment, furniture, specialised machinery and other items may be better funded through separate fit-out or asset finance facilities.

It depends on the equipment and facility. Permanently installed items may sometimes form part of construction costs, while vehicles, machinery and standalone equipment are generally better suited to asset finance.

Potentially. A broader finance package may include additional working capital to help cover wages, stock, marketing, suppliers and other operating expenses once construction is completed.

Potentially, although construction finance generally requires more detailed information than a straightforward business loan. Low-doc commercial property options may be available in some circumstances, particularly where there is strong security and equity.

Potentially. A new business may be able to obtain construction finance where the overall transaction is strong. Lenders may place greater emphasis on the applicant's experience, contribution, security, business plan, forecasts and the completed property's value.

Potentially. Credit issues don't automatically prevent approval, although they can affect lender choice, rates, required contribution and loan terms. Strong equity, security and a well-supported project may improve the available options.

Potentially. Construction facilities may be refinanced during or after the project, subject to the stage of construction, property value, costs incurred and lender criteria.

Depending on the structure, the construction facility may convert to longer-term commercial property finance, be refinanced into another facility or be repaid from the sale of the completed property.

Business construction finance is commonly used where a business is constructing or substantially improving commercial premises, particularly for its own use. Property development finance is generally designed for projects being constructed primarily for sale or commercial development profit and can involve different assessment, presale, feasibility and equity requirements.

Potentially. Development finance may be available for eligible commercial, industrial and other property development projects. Lenders generally assess the development feasibility, land value, construction costs, approvals, borrower experience, equity contribution, expected completed value and exit strategy.

Requirements vary but can include identification, business and company details, financial statements, tax returns, BAS, bank statements, development approvals, building plans, construction contracts, cost estimates, builder details, valuations and evidence of your contribution or equity.

Construction finance generally requires more assessment than a standard business loan. Timing depends on the project and whether valuations, approvals, construction contracts, quantity-surveyor reports and financial information are already available. Starting the finance process early can help avoid delays once construction is ready to begin.

There can be. Depending on the facility, costs may include establishment fees, valuation fees, legal fees, quantity-surveyor costs, progress inspection fees and other facility charges. We compare the overall cost of the finance, not just the interest rate.

Getting an initial quote with Overdrive does not require an upfront credit check. We can review your project and compare suitable options before progressing to a formal application. If you decide to proceed, the selected lender may conduct a credit enquiry as part of its assessment.

Business construction finance can be suitable if you're building new commercial premises, expanding an existing property or undertaking substantial commercial construction works. The right structure depends on your project costs, property value, contribution, cash flow, construction timeframe and plans for the property once completed.