A development can be viable on paper and still stall before the first slab is poured. The site may be under contract, consultants engaged and builder ready to mobilise, yet the bank wants more pre-sales, more equity or another six weeks to reach credit approval. This development funding guide sets out how Australian developers can approach private development finance with a clearer view of what lenders assess, how facilities are structured and where funding pressure commonly arises.

Private funding is not simply a replacement for bank debt. It is a commercial tool for projects where timing, structure or borrower circumstances do not fit a mainstream credit policy. Used well, it can secure a site, cover head works, fund construction completion or bridge a project through to sales settlements and refinance.

Development funding guide: start with the real funding gap

The first question is not, “How much can I borrow?” It is, “What must the facility achieve, and by when?” A developer buying a site with a 30-day settlement has a different requirement from an established builder completing a partially constructed townhouse project. Both may need development funding, but the security, term, drawdown profile and exit strategy will be very different.

Development facilities commonly support land acquisition, refinance of existing site debt, construction costs, civil works, subdivision expenses, head works, interest capitalisation, marketing costs and completion funding. In some cases, funding may also be used to resolve a short-term business obligation that is preventing the project from proceeding, provided the lender is comfortable with the overall position and security.

Before speaking with lenders, separate the total development cost from the immediate funding gap. Include purchase price or current land debt, stamp duty, consultant fees, council contributions, demolition, construction costs, contingencies, finance costs and GST. Then identify what equity is already in the deal, whether through cash, land value, work completed or retained stock.

A lender will want to know where every dollar sits in the capital stack. If costs are understated or the contingency is unrealistic, the application becomes harder to support. A clear feasibility does not need to be dressed up, but it must reflect the project as it will actually be delivered.

How private lenders assess a development deal

Private lenders are generally more focused on security, completed value, project feasibility and exit certainty than on a borrower fitting a standardised income or credit-score model. That does not mean documentation is irrelevant. It means the assessment is commercial rather than purely policy-driven.

The underlying property is central. Lenders will consider location, zoning, land value, planning status, demand in the local market and the strength of comparable sales evidence. Metropolitan sites with clear approvals and an established buyer market are often simpler to fund than specialised regional projects, although regional developments can be financeable where the fundamentals are sound.

The project team also matters. A borrower with a proven record of delivering similar developments can usually present a stronger case than a first-time developer. However, lack of experience is not always a deal-breaker. An experienced builder, project manager, quantity surveyor and conservative funding structure can help address that gap.

Lenders will look closely at the proposed exit. Common exits include settlement of completed stock, sale of the site after value uplift, refinance to a bank or non-bank lender, and sale of retained commercial or residential stock. The exit needs to be more than a broad intention. If the facility relies on sales, evidence of market demand, pricing and likely settlement timing is needed. If it relies on refinance, the anticipated lender requirements must be realistic.

Pre-sales can strengthen an application, particularly for larger apartment or townhouse projects, but they are not always mandatory in private credit. Some lenders will consider no-pre-sale development funding where leverage is conservative, security is strong and the exit is credible. The trade-off may be a lower loan-to-value ratio, additional equity, tighter controls or a shorter facility term.

Choosing the right development finance structure

There is no single development loan that suits every project. The right structure depends on the stage of the project and the constraint that needs solving.

A senior first mortgage facility is often used for site acquisition or construction funding. It gives the lender first-ranking security over the property and is generally the most straightforward part of the capital stack. Funds may be advanced upfront for acquisition, then released progressively against construction milestones.

Construction drawdowns are usually controlled. A lender may require a quantity surveyor report, builder contract, invoices, inspection reports or evidence that the borrower has contributed their required equity before each draw. This can feel restrictive when a project is moving quickly, but it protects the facility from being fully advanced before the underlying work is complete.

Mezzanine finance sits behind a senior lender and can increase the available capital where the senior facility does not cover the full requirement. It can be useful for experienced developers with equity tied up in other projects, but it comes at a higher cost and adds complexity. The senior lender must generally consent to the arrangement, and the repayment sequence needs to be understood from day one.

For incomplete developments, the central issue is often not valuation alone. It is whether the remaining works can be completed within the available funding and whether the finished product has a reliable exit. A lender may require a detailed cost-to-complete report and a contingency that reflects current labour and materials pricing. Developers should be cautious about relying on old builder quotes in a changing market.

Presenting a fundable application

Speed improves when the lender receives a complete, coherent package early. A one-page overview is useful, but it should be backed by documents that allow the deal to be assessed without repeated guesswork.

For most development funding enquiries, expect to provide the contract of sale or current title details, a feasibility, planning approvals or DA status, plans, build contract or cost schedule, valuation information where available, a summary of experience, current debt details and the proposed exit. If the project includes company or trust borrowers, provide the relevant entity structure and identify directors, trustees and guarantors.

Be direct about issues that could emerge during due diligence. This may include prior credit impairment, an expiring approval, a disputed builder variation, overdue land tax, low pre-sales or a previous project delay. Private lenders deal with complex scenarios regularly. Problems are easier to structure around when they are known upfront than when they appear after indicative terms have been issued.

The funding request should also distinguish between required and optional funds. For example, site settlement, essential works and discharge of an existing mortgage may be non-negotiable. A larger marketing allowance or contingency top-up may be useful but not essential. This gives lenders room to propose alternatives rather than declining the entire request because one element does not fit.

Cost, leverage and timing: the trade-offs to weigh

Private development funding is generally priced higher than conventional bank finance. That reflects faster decision-making, flexible underwriting, shorter terms and the willingness to consider situations banks may decline. The relevant comparison is not just the interest rate. It is the commercial cost of missing a settlement, losing a site, leaving a project unfinished or waiting through a bank process that may not result in approval.

Leverage is another trade-off. A higher loan amount can preserve cash, but it may increase interest costs, reduce project profit and place more pressure on the exit. A conservative facility with enough contingency can be more valuable than an aggressive structure that leaves no room for delays, variations or softer end values.

Timing should be treated as a project risk, not an administrative detail. Valuations, legal work, lender due diligence, FIRB approval where relevant, council conditions and builder documentation can all affect settlement. Start the funding process as soon as the project is sufficiently defined. Waiting until the final days before settlement limits lender choice and can reduce negotiating power.

Keep the exit in view from day one

The strongest development finance applications show how the debt will be repaid before the first advance is made. Reassess that exit at key stages: after site acquisition, when construction starts, before practical completion and as sales contracts move towards settlement. If values, construction costs or sales velocity shift, address the gap early.

For developers facing a bank decline, a tight settlement or an incomplete project, the answer is rarely to force a generic loan product into the deal. It is to build a funding structure around the security, remaining costs and achievable exit. No Doc Loans can assess the requirement and seek competitive options from a broad panel of private lending partners, helping move a commercially sound project from delay towards delivery.