Commercial development finance and construction loans

Ardent Capital Group brings the same method to every client: execution and strategy, clear advice for smart lending, and long-term growth. That means the right lender, structure and timing, straight advice so you borrow with confidence, and today's deal built toward where you want to be tomorrow. On commercial development the panel changes with the asset class, and some lenders will not hold the asset at all. Knowing which is which before you apply is most of the work.

It is sized against the gross realisable value of the completed property, net of GST, and against the total cost to build it. Lenders write to a share of each and lend the lesser of the two. Major banks reach up to 65% of gross realisable value and non-bank lenders up to 70%, against up to 80% and 85% of total development cost respectively. We arrange development finance from $50,000 to $30 million.

On most commercial projects it is what the lender wants to see, and the reason is structural: there are no dwellings to presell, so a lease is what fixes the end value. Where no tenant is committed, the project is assessed on market evidence and a trading feasibility instead, which narrows the panel and generally lifts the contribution expected.

By capitalising the income it will produce, at a yield drawn from comparable sales of that asset class. For a leased building that income is the rent. For a trading asset like a motel, a park or a service station it is the operating result the completed business is expected to produce. Either way the figure is quoted net of GST.

Yes, and it is a common project. An owner-operator build has an occupier from the start, which answers the question a lease would otherwise answer. The exit is a refinance onto a term facility rather than a sale, and the lender assesses your trading history alongside the project, so bring it early.

Because those assets sit on their unacceptable security lists, in the same way construction does at some lenders. It is a policy position about the asset class rather than a judgement on a particular project, and it is exactly why these files go to a matched panel rather than to whichever bank you already deal with.

No. A purchase is written against the value of the property as it stands and its existing income. A development is written against what the finished property will be worth and what it costs to build, through a different lender panel. Each tab above links to the page covering the purchase of that asset class.

Yes. Where the site already has consent, the purchase and the construction can sit under one facility with one valuation and no refinance in between. Where consent has not issued, the land is usually funded first through a land acquisition facility and the construction funding follows once it does.

It should be costed in from the start. A trading building cannot open on a shell, so kitchen and bar plant, furniture, signage, forecourt equipment and cabins are part of the cost to complete rather than an expense that follows it. A feasibility that leaves them out is the one that runs short before the doors open.

Usually not. Interest during construction is normally capitalised, meaning it is added to the facility rather than paid monthly, because the property produces no income while it is being built. That is standard on development facilities.

Commonly 12 to 24 months, set against the build programme plus a realistic allowance for leasing up or for the trading operation to establish. On income capitalised assets the term should reach a stabilised position rather than stopping at practical completion, because that is the point the exit prices off.

Frequently because construction sits outside what that particular lender writes, or because it does not hold appetite for the asset class. Some lenders list construction, service stations and caravan parks as unacceptable security. Development is funded by a different lender panel from commercial mortgages, and matching a project to that panel is the work.

That is a normal position on an income capitalised asset and there is funding for it. The facility can be refinanced onto a term loan against the income as it stands, or development exit finance holds the position while the lease up or the trading result establishes.

The development consent, any agreement for lease or operator agreement, the fixed price building contract, your feasibility including the trading assumptions where the asset is income producing, the contract of sale or title for the site, and a quantity surveyor report where one exists. We can give you an indicative position from the consent and the feasibility.

Most of the time, no. Where a project requires significant preparation due to its complexity, a small mandate fee may apply, and we will always be upfront about this before any work begins.

Although we are based in Sydney, we service clients across all major Australian cities, including Melbourne, Perth, Brisbane, the Gold Coast, Adelaide, Canberra and Hobart, along with their surrounding regional areas. Wherever your project is located, we can arrange your finance.

Although our main speciality is property loans for business owners, we also assist with asset finance and working capital. On asset finance, that covers the plant and vehicles a building business runs, from excavators and scaffolding to site utilities and work vehicles. On working capital, we arrange business overdrafts, lines of credit and cash-flow funding to carry a project between drawdowns, to cover holding costs, and to pay consultants ahead of the next site.

With the feasibility and the site, and a conversation before either is locked in. An owner-operator build is a well travelled path and your trading history does real work in the file, which is an advantage many first time developers do not have. We will walk you through what the panel wants to see, what the fitout and plant need to include and how the term should be set, before you commit to anything.

No. Arranging finance and advising on financial products are two different disciplines, and we do the first. What we bring is the credit analysis lenders require, the structuring of the facility, and the strategy for putting your application in front of lenders whose appetite matches it.

Because we act as a credit representative under an Australian Credit Licence, we do not give financial product, superannuation, taxation or legal advice, and nothing we provide should be taken as such. Where your circumstances need that input, we are happy to work with your accountant, financial adviser and solicitor to understand the full picture before anything is submitted.

The information on this page is general in nature and does not take account of your objectives, financial situation or needs.