Private lender development finance suits a commercial file when the security, the draw profile and the exit all support the facility on offer. No single private lender is best for every project or sector. The offer that can complete is the one whose draw conditions match the build and whose term outlasts a realistic delay, even when another offer has the higher headline limit.
Match the Private Facility to the Commercial Use
Choose a private facility by what the borrowed money will do and how it will be repaid. A development facility funds a project in stages and is repaid from sales or a refinance on completion. A short-term commercial loan secured by property is repaid from a sale or a mainstream refinance. An operating-business facility is repaid from trading cash flow, so the business’s records carry the file.
Published products show how private financiers separate these uses. AltX Lending (formerly Assetline Capital) lists development finance for projects from land through construction to residual stock, with progressive drawdowns during construction. Its short-term private lending covers working capital, site acquisitions and urgent refinances against residential or commercial security. Its private lending page describes an asset-led and exit-led assessment.
Funding.com.au’s broker product guide makes the same split. Its Commercial product lends to companies and trusts against residential, office, industrial or retail property. Construction, land and residual stock sit under separate products with their own documents and draw rules.
Classify the file before you request terms:
| File type | What repays the debt | Evidence the comparison needs |
|---|---|---|
| Development project | Sale of completed stock or a refinance once the project is finished | Feasibility, approvals, building contract, cost report, valuation on completion and presales where held |
| Operating-business facility | Trading cash flow of the business | Financial statements, business bank activity, existing debts and the business’s main contracts |
| Property-backed commercial borrowing | Sale of the security property or refinance to a mainstream lender | Valuation, title and existing mortgages, lease income where relevant and written exit evidence |
A dental practice buying its premises is property-backed borrowing that relies on the practice’s income. A townhouse project is a development project. Assessing either one against the other’s evidence produces terms that cannot settle. For the general mechanics of non-bank funding, use the private lending guide. When a commercial property file rests on alternative income evidence, the guide to low doc commercial loans covers how that assessment works.
Compare Security and the Capital Stack
First-ranking debt is repaid ahead of every other lender from the security, so it is the cheaper part of a project’s funding. Mezzanine finance ranks behind the first mortgage and ahead of the borrower’s equity. It lifts total borrowing above what the first-ranking lender will advance, at a higher cost and with fewer rights.
Marshall Investments, for example, publishes mezzanine debt for developments among its financing products, and considers loans of $2 million to $25 million over 6 to 36 months. One of its published examples is a $2.3 million mezzanine facility registered behind a local bank. That position decides what the mezzanine lender recovers if the project fails.
Law firm Hopgood Ganim’s guide to negotiating mezzanine finance sets out what the intercreditor deed controls:
- The senior lender ranks first until its debt is repaid, regardless of when each security was registered.
- The mezzanine lender cannot demand or accept repayment until the senior debt is cleared.
- Enforcement is the senior lender’s call, and a standstill period can stop the mezzanine lender acting after a default.
- The mezzanine lender may negotiate cure and buy-out rights, and a cap on the senior debt that ranks ahead of it.
Guarantees follow the same pattern. Mezzanine security usually mirrors the senior lender’s mortgage and general security, with any director guarantees. The intercreditor deed can still limit when the mezzanine lender may call on those guarantees. Give the borrower’s directors both sets of guarantee terms before they sign, because each guarantor is exposed to both lenders.
A delayed or impaired exit hits the mezzanine lender first. When sales fall short, senior debt, its interest and its costs are paid before any mezzanine debt. The mezzanine lender then pursues the guarantors or waits behind the senior lender’s enforcement. Expect a mezzanine term sheet to price that risk with higher interest and fees.
Existing Security and Senior Consent
Existing security can block a structure that looks fundable on headline leverage. If a bank already holds a first mortgage over the site, a private second mortgage usually needs that bank’s consent. Hopgood Ganim notes that registering a second mortgage without consent can breach the senior documents, which may let the senior lender sell the property.
Check every existing mortgage, caveat and general security registration before you quote a structure. Ask the senior lender early whether it will consent to second-ranking security and on what terms. A refusal moves the file to refinancing the senior debt or adding borrower equity, whatever leverage the mezzanine term sheet shows.
Check Development Draws and the Repayment Exit
A development facility advances money in stages, and each stage has conditions. Trace the project evidence through the financier’s actual assessment before you compare offers.
Funding.com.au’s guide shows a typical chain for development and commercial construction. It funds through progress draws on a cost-to-complete basis. It asks for a feasibility study, a quantity surveyor (QS) report and a fixed-price building contract. The development limit is up to 65% of gross realisation value (GRV) excluding GST, and each draw carries its own drawdown fees.
Work through the evidence in this order:
- Land or site position: title, purchase contract or settlement, existing debt and the as-is valuation.
- Approvals: the development approval and any conditions that affect the start, staging or sales.
- Builder and costs: the building contract, the builder’s capacity, the QS cost report and the contingency allowance.
- Valuation: the on-completion value the lender will rely on, and whether it is GRV including or excluding GST.
- Draw conditions: the QS or valuer inspection before each draw, the cost-to-complete test and the equity the borrower must contribute first.
- Presales or sales evidence: what the lender counts, if it requires any.
AltX’s development page assesses presale requirements against project strength and sponsor capability rather than a fixed minimum. That makes the written condition in the actual offer the only reliable number for your file.
Stress the Exit Before You Compare
Test the proposed sale or refinance exit against three adverse events:
- A completion delay. Interest keeps accruing after the interest budget is spent, and a facility term that ends at planned completion needs an extension.
- A cost overrun. A cost-to-complete test stops draws until the borrower funds the gap.
- A weaker valuation. A limit set as a percentage of GRV shrinks when the on-completion valuation falls.
Each event changes the decision only through a facility condition. Find the clause that governs each one. Look for the maturity date and any extension right, the interest budget and what happens when it runs out, the cost-to-complete test and the valuation covenant. A refinance exit also needs a lender willing to take out completed stock. AltX and Funding.com.au both publish residual stock facilities for unsold completed property, which shows that exit route exists but not that it applies to this project.
Assess Dental, Accommodation and Resources Files
Each sector changes what the security is and where repayment comes from. A sector label tells you nothing about whether a particular financier will fund the file.
Private Lender for Dental Clinic Finance
A dental clinic repays from practice cash flow, so the practice’s financial statements carry the assessment. BOQ Specialist publishes dental practice purchase loans that use the practice’s goodwill and equipment as security. It prefers two to three years of financial statements and requires no goodwill valuation.
A private property-secured facility works differently. Funding.com.au’s Commercial product takes a first mortgage over residential, office, industrial or retail property. The clinic therefore needs property to offer: owned premises, or the owner’s other real estate. Fit-out and dental equipment usually carry their own asset finance, so check existing equipment finance before you rank the private debt.
Ask how the term compares with the premises lease when the clinic rents. Show the practice’s cash flow after the principal’s drawings, existing equipment repayments and the proposed interest, and name the refinance or sale that repays the private loan.
Private Lender for Serviced Apartment Finance
Serviced apartments mix property security with operating income. Funding.com.au lists serviced apartments among the niche securities it assesses case by case, and tells brokers to discuss them with a business development manager (BDM) before submitting.
Separate two kinds of file. A single strata unit in a managed building is property-backed borrowing. Its value and resale depend on the management agreement, any restriction on owner occupation and the building’s permitted use. A whole building run as accommodation is an operating business. Occupancy, room rates and the operator’s accounts then carry the valuation and the repayment case.
For either file, collect the management or operating agreement, the occupancy and income history and the planning permission for the current use. Confirm the basis the valuer will use, because a valuation on going-concern income and one on vacant possession can differ widely.
Private Lender for Mining and Resources Finance
Mining and resources files concentrate risk in a few contracts, specialised equipment and commodity cycles. The Reserve Bank’s 2013 analysis of mining services companies found that smaller firms rely more on mining activity than larger ones. It also found that bank loans and equipment finance make up most of their debt, and that equipment bought for a boom might sit underused.
Identify these risks in the file:
- The share of revenue from the largest mine-site contract, and the remaining term on that contract.
- Termination or suspension rights the principal holds under the contract.
- Equipment age, location and resale market, plus every existing equipment finance registration.
- The commodity behind each contract and what happens to the work if prices fall.
The private products published by AltX and Funding.com.au are secured by real property. Neither names mining services among its uses. A resources file therefore usually reaches a private property lender only when the borrower or a guarantor can offer real estate. The repayment source must still be a contract, a sale or a refinance the lender accepts. Ask the financier to confirm in writing that it will assess the sector before the client relies on the approach.
Build a Like-for-Like Commercial Offer Matrix
An offer matrix puts every indicative offer into the same fields, under the same draw and exit assumptions, so you compare what the borrower can actually draw and repay. It is a decision aid for your file, not a rate search or a lending offer. Fill each field from the indicative offer or term sheet, and keep that document on file.
Record these fields for each offer:
- Borrower and purpose: the borrowing entity and the evidenced use of funds.
- Committed amount and net proceeds: the facility limit, less fees, interest budget and retentions.
- Security: ranking, the properties charged and any general security.
- Draw conditions: inspections, cost-to-complete tests and the equity required first.
- Term and extension: the maturity date, any extension right and its cost.
- Interest treatment: monthly, prepaid or capitalised interest, plus the size of any interest budget.
- Fees: establishment, line, drawdown, legal, valuation, extension and exit fees.
- Guarantees and covenants: who guarantees, valuation or LVR covenants, presale conditions.
- Exit requirements: what the lender needs to see before maturity.
Two Hypothetical Townhouse Offers
This example is hypothetical. The figures are assumptions for a worked comparison, not quoted lender terms. A developer is building six townhouses with an assumed GRV of $9,000,000 excluding GST. The project needs $5,000,000 of net debt proceeds over an 18-month build, after the borrower’s equity.
| Field | Offer 1: single first-ranking facility | Offer 2: first mortgage plus mezzanine |
|---|---|---|
| Committed amount | $5,850,000 (65% of GRV) | $5,000,000 senior plus $900,000 mezzanine |
| Establishment fees | 2.5%: $146,250 | 1.5% senior ($75,000) plus 3% mezzanine ($27,000) |
| Interest budget | $650,000, capitalised | $500,000 senior plus $200,000 mezzanine |
| Net proceeds | $5,053,750 | $5,098,000 |
| Term | 24 months | 18 months for both facilities |
| Valuation covenant | Limit capped at 65% of GRV | Senior capped at 60% of GRV, total debt at 75% |
| Unresolved conditions | Presale level not yet stated | Intercreditor deed and senior consent not yet issued |
Both offers cover the $5,000,000 need on the assumed figures, and Offer 2 costs less in fees. The adverse cases decide the choice.
Move completion out by six months. Offer 1’s 24-month term absorbs the delay. Offer 2’s facilities both mature at planned completion, so the developer needs extensions from two lenders, and the intercreditor deed shapes what the mezzanine lender can agree to. In either offer the delay adds interest beyond the budget: about $321,750 on Offer 1, assuming its full $5,850,000 is drawn at a hypothetical 11% for six months. Offer 2 adds about $306,000 on its full $5,900,000, assuming 9% on the senior debt and 18% on the mezzanine debt.
Now cut the on-completion valuation by 10%, to $8,100,000. Offer 1’s limit falls to $5,265,000, which is $585,000 below its committed amount. Offer 2’s senior cap falls to $4,860,000, which is $140,000 below its $5,000,000 limit, while its 75% total-debt cap of $6,075,000 still covers the $5,900,000 total. The developer would need to fund the gap in either case, but Offer 1’s gap is about four times larger.
The matrix shows that Offer 1 is stronger against delay and Offer 2 is stronger against a valuation fall. Record which risk this project is more likely to meet, with the evidence for that view, and send the unresolved conditions back to each financier in writing.
Verify Funding Conditions Before Acceptance
Indicative terms are not a funding commitment. Before the borrower relies on completing, confirm who is lending and under what authority. Then list what remains between the indicative terms and a binding facility.
Confirm the funder’s identity first. Record the legal entity that will sign the facility agreement and hold the mortgage, with its ABN. Note whether it is a fund, a manager or a lender in its own right. Where the financier holds an Australian credit licence (ACL), record the number. Funding.com.au, for example, prints its licence number on its product guide.
Borrower Purpose and the National Credit Code
Commercial labels do not decide whether consumer credit law applies. Section 5 of the National Credit Code covers credit to a natural person or strata corporation for personal, domestic or household purposes. It also covers credit to purchase, renovate or improve residential property for investment. An individual building townhouses to keep as rentals can therefore fall inside the Code, while a company building to sell generally does not.
A business purpose declaration does not settle the question. Under section 13(3), the declaration is ineffective if the credit provider knew or had reason to believe the credit was for a Code purpose. The same applies if reasonable inquiries would have revealed that purpose. In ASIC v Green County Pty Ltd [2025] FCA 367, the Federal Court held that the lender could not simply rely on signed declarations. ASIC’s media release on the decision notes that the loan introducer was also found to have engaged in unlicensed credit activity.
Keep the evidence of purpose on your file: the entity’s business records, the development approval, the sales strategy and the use of every dollar. If the credit is regulated, your credit assistance is regulated too, with the licensing and conduct obligations that follow. Brokers adding commercial lending to a residential practice can find the appointment and workflow changes in the guide to moving from residential to commercial broking.
From Indicative Terms to a Binding Commitment
Map each step the financier still has to take:
- Indicative terms or a term sheet, usually subject to credit approval and valuation.
- Credit approval and a letter of offer that states the conditions precedent.
- Valuation addressed to the lender, and the QS report for a development.
- Facility agreement, mortgage, general security and guarantees, signed by both sides.
- Senior lender consent and an executed intercreditor deed where mezzanine debt sits behind a first mortgage.
- Satisfaction of the conditions precedent before settlement or the first draw.
Assign each item an owner and a date for chasing it. The lender instructs the valuer and the QS. The borrower’s lawyer reviews the facility documents and guarantees. The borrower or its existing lender obtains any senior consent. The developer supplies the sales and refinance evidence the exit requires.
Before the borrower relies on completion, get these written confirmations:
- The signed letter of offer.
- The list of outstanding conditions precedent.
- Any senior lender consent and the executed intercreditor deed.
- The lender’s confirmation that the first draw conditions are met.
When a confirmation is missing, tell the borrower which settlement or contract date it puts at risk.
