Private Construction Credit for Developers and Builders
Private construction credit may provide a project-specific alternative where a development sits outside standard bank policy or requires transitional capital. Assessment still depends on the site, borrower, approvals, budget, remaining costs, drawdown controls and credible project exit.
Business-purpose and commercial development finance only. All scenarios remain subject to valuation, quantity-surveyor review, due diligence, documentation and lender criteria.
What is private construction credit?
Private construction credit is non-bank funding for an eligible property-development or building project. Depending on the transaction, it may support site acquisition, construction, verified cost-to-complete, project completion, subdivision, development exit or another defined commercial requirement.
The facility may be secured by a first mortgage, a second mortgage or another valid commercial security structure. Funding is commonly controlled through staged drawdowns rather than advanced as unrestricted cash. Requirements vary by project and lender.
What does a construction lender examine?
Borrower and team
Developer, builder, guarantors, ownership, experience, capability and prior project conduct.
Site and title
Ownership, location, planning, zoning, permits, easements, existing debt and proposed security.
Project feasibility
Total development cost, end value, profit margin, market evidence, presales and risk sensitivity.
Construction budget
Executed contracts, trade costs, professional fees, statutory costs, interest, holding costs and contingency.
Progress and drawdowns
Current works, amount paid, claims, defects, remaining scope and quantity-surveyor verification.
Exit strategy
Sale, residual-stock facility, conventional refinance or another evidenced repayment pathway.
Where may private construction credit fit?
Site acquisition
Purchase or settlement of an eligible development site with a defined approval and funding pathway.
Pre-construction
Eligible planning, consultants, permits, early works or other verified pre-development costs.
Construction
Staged funding of approved works under a controlled drawdown process.
Cost to complete
Verified remaining capital needed to take an incomplete project to an agreed completion point.
Construction completion
Funding for eligible remaining works, rectification, certification, titles and settlement requirements.
Development exit
Refinance of construction debt after completion while sales, leases or long-term finance progress.
What should a developer prepare?
- borrower, developer, builder, guarantor and ownership details;
- site address, title, current debt, valuation and proposed security position;
- planning approvals, permits, drawings and project programme;
- executed building contract, scope of works and consultant appointments;
- detailed development budget and funding sources;
- quantity-surveyor reports, progress claims and current works evidence;
- presales, sale evidence, leases or market support where relevant;
- an itemised funding requirement and required net proceeds; and
- the proposed exit, timing, evidence and contingency.
Build a current sources-and-uses schedule
The remaining budget should reflect the project’s present condition, not simply the unpaid portion of the original contract. Potential uses may include:
- existing secured-debt payout or refinance;
- builder, subcontractor and supplier arrears;
- remaining construction and rectification works;
- consultant, authority, certification and legal costs;
- valuation, quantity-surveyor and lender costs;
- interest and facility costs during completion and exit;
- rates, insurance, security, utilities and holding costs; and
- a justified contingency for remaining project risk.
Confirmed sources may include borrower equity, undrawn existing funds, the proposed facility, verified presale proceeds or another approved source. The schedule must reconcile and remain supportable under a delay scenario.
How staged construction funding may work
Approved budget
The lender adopts an agreed construction and project-cost schedule.
Equity contribution
Required borrower equity may need to be contributed before or alongside lender funds.
Progress claim
The builder submits a claim supported by invoices, programme and project evidence.
QS verification
A quantity surveyor may inspect progress, confirm value completed and assess remaining cost.
Conditions cleared
Required documents, insurance, approvals, statutory declarations or other conditions are satisfied.
Controlled payment
Approved funds are advanced in accordance with the facility and drawdown process.
What can change a construction structure?
Cost escalation
Price changes, scope variation, defects, arrears and inadequate contingency can increase the remaining requirement.
Programme delay
Weather, labour, supply, approvals, builder issues and certification can extend interest and holding costs.
Value and sales risk
End values, presales, purchaser finance, valuations and settlement timing may change.
Documentation risk
Title, planning, contract, insurance, priority, legal and drawdown requirements may delay funding.
Calculate net project funds and total debt
Review gross facility, current secured payouts, interest treatment, establishment fees, valuation and quantity-surveyor costs, legal and registration costs, broker costs, drawdown fees, extension provisions, default interest and discharge costs.
Practical test: compare confirmed sources with all remaining uses, including interest, holding costs and contingency. Then test whether the proposed exit repays the total projected debt with an appropriate buffer.
How a private construction request may progress
Project review
Define borrower, site, approvals, current stage, required funds, deadline and exit.
Feasibility and budget
Provide value, total development cost, sources and uses, programme and contingency.
Indicative structure
Potential amount, leverage, term, interest treatment, drawdowns and conditions are discussed.
Due diligence
Complete valuation, quantity-surveyor, credit, legal, title, planning and builder review.
Documents and conditions
Loan, mortgage, construction and other security requirements are completed.
Drawdowns and monitoring
Approved project claims are assessed and funded under the agreed controls.
Plan beyond practical completion
Potential exits include settlement of presales, sale of completed stock, residual-stock finance, conventional investment refinance or another asset sale. Completion alone is not necessarily the repayment event; titles, sales, purchaser finance and settlements may add time.
Hypothetical example only: a developer has an incomplete townhouse project and verified remaining works. A private completion facility might be considered if site value, title, existing debt, current budget, QS report, contingency, required net funds and a supported sale or residual-stock exit satisfy lender criteria. This is not a completed client transaction.
Private construction credit FAQs
Is private construction credit available with no credit checks?
No. Requirements vary, but the lender may assess borrower, guarantors, credit history, liabilities, property, budget, project risks and exit.
Can private credit fund an incomplete development?
Potentially, where the current position, remaining works, cost to complete, security, required net funds, contingency and exit satisfy lender criteria.
Is a quantity surveyor always required?
Requirements vary, but lenders commonly use quantity-surveyor review for construction progress, budget, remaining cost and drawdown assessment.
Can a second mortgage fund construction?
Potentially, subject to available equity, first-lender consent or priority, project feasibility, net proceeds, budget and exit.
Does approval guarantee every future drawdown?
No. Drawdowns remain subject to the facility terms, progress verification, budget, conditions and absence of relevant defaults.
Can this finance fund an owner-occupier home build?
No. This service focuses on genuine business-purpose and commercial development finance, not consumer owner-occupier construction credit.
Sources and further reading
Have a development or construction funding requirement?
Share the borrower, site, current stage, budget, required net amount, existing debt, deadline and proposed exit. Basic Finance can discuss potential pathways, subject to assessment and lender criteria.