April 3, 2026 Office, Education & Childcare

What Childcare Centre Owners Should Know About Commercial Property Finance

Buying the premises your childcare or early learning centre already operates from is a defining move for any provider. At Ardent Capital Group we speak with centre owners about this kind of commercial property purchase, and this guide walks through how a lender reads a childcare freehold, what deposit to plan for, and how these purchases are commonly financed.

Ardent Capital Group is a specialist in commercial mortgages for childcare and early learning operators across Australia. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.

Funding capacity: Access finance from $100K to $10M+, aligned to your centre profile.
Track record: Over $500M in funding facilitated across the last decade for 1,000+ borrowers.
Specialist focus: Commercial mortgages for owner occupiers and investors, structured for optimal financial outcomes.
National coverage: Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Hobart, and surrounding regional towns.

The case for owning your childcare centre premises

A centre's fit-out is specific and expensive. Rooms, bathrooms, cot rooms, nappy change areas, commercial kitchen, acoustic treatments, soft-fall playgrounds and shade, fire and security systems, access control and CCTV, car park and safe drop-off zones. That capital is anchored to the site. Your enrolments are tied to the catchment, nearby schools and transport, and your service approval and planning approval often suit the site. The sector has shown resilience, supported by the Child Care Subsidy and steady participation in early learning. Loan repayments convert occupancy and cash flow into an owned asset over time.

Main drivers:

Control and stability: Remove lease risk, set the centre up for long-term operations in the right location.
Fit-out protection: Avoid losing sunk fit-out capital at lease expiry or on relocation.
Asset building: Convert rent into equity and improve retirement or succession options.
Cash flow alignment: A commercial rent between the property entity and trading business can suit the operating rhythm.

Buying may not suit if your lease horizon is short, if relocation is planned due to expansion or a better catchment, or if capital is better deployed into rooms, staffing, curriculum, or marketing. The decision sits with you.

Our team structures a dedicated childcare centre property loan for operators across Australia, so the file goes to the right lender.

Financing a childcare centre: how it works

Deposit and LVR: For an owner-operator childcare freehold, loan to value ratios typically sit around 60 to 65 per cent, so plan for a 35 to 40 per cent deposit. Investment centres generally sit around 55 to 65 per cent. A move toward 100 per cent of the purchase price is possible where you add security you already own, usually your home, and our broker team can explain the structure and security options. Owner-occupiers with a strong trading centre often see the higher end of these ranges.
Loan term and structure: Banks commonly publish terms around 10 to 15 years, while non-bank lenders often run 25 to 30 years. Lenders may offer principal and interest for steady amortisation, or interest only for a period where cash flow needs flexibility, for example during occupancy ramp-up or renovation.
Security and serviceability: The property is primary security. Lenders assess serviceability using business financials, fee revenue mix, occupancy levels and margins, along with existing debts and director positions.
Owner-occupier treatment: Lenders generally view a centre you operate more favourably due to lower vacancy risk and tighter control of the tenancy.

How the deal is put together

Many childcare early learning centre operators hold the freehold in a separate entity, such as a company or trust, then lease it back to the trading business on commercial terms. A lender then reads the inter-entity rent as the serviceability line, which separates operating risk from the property, supports exit planning, and keeps rent-setting clear. Ardent arranges the finance around how the centre is already held and occupied; your accountant confirms the tax and ownership detail before anything is locked in.

What credit teams weigh up

Business financials: Historic and current profit, occupancy and waitlist, fee schedule, CCS exposure, wage ratio, and EBITDA trends.
Serviceability metrics: Debt cover ratios, existing facilities, director income and commitments, and headroom under stress rates.
The property: Planning and service approvals, number of approved places, design compliance, recent capex, land size, parking ratios, traffic flow and drop-off design.
Catchment and competition: Demographics, supply of places nearby, pipeline centres, and school proximity.
Valuation and sale evidence: Comparable sales and yields for childcare freehold, quality of the building, and maintenance condition.
Deposit and equity position: Cash, term deposits, or the ability to leverage your equity in other property.
Lease and occupancy: For investment purchases, lease length, options, rent escalations, and operator covenant. For owner-occupiers, internal lease terms between entities.

A specialist broker who understands childcare assets, service approvals and cash-flow patterns helps present the right story to the right lender.

How childcare centre purchases are typically financed

Owner-occupier childcare purchases usually involve more than one entity, and the arrangement changes how a lender reads the security and the guarantees. A few arrangements borrowers already use come up often:

A holding entity plus the operating company: The freehold sits in a property company or trust, and the trading company that holds the service approval leases it back on commercial terms. This separates operating risk from the building and lets you set a defensible rent that supports serviceability across both entities. The lender looks to the trading company's fee income and occupancy, and usually takes directors' guarantees.
Multiple trusts: Some operators run several centres, each freehold held in its own trust. A lender assesses each site's approved places, catchment and lease on its own merits, then looks at the group's combined position for serviceability.
Unit or discretionary trust with a corporate trustee: Beneficiary or unit ownership decides who holds the value in the property as equity builds. A lender wants clear sight of the trustee, the beneficiaries and the guarantors before it prices the loan against the childcare asset.
SMSF with a bare (custodian) trust: A fund can buy childcare premises that qualify as business real property and lease them to your trading entity at market rent. The property sits in a separate holding trust, the lender's recourse is limited to that one asset, and the fit-out, equipment and goodwill are financed outside the fund. SMSF childcare lending generally sits around 65 to 75 per cent, so the fund needs its own deposit, and cross-collateralisation is not available inside super.

We arrange and structure the credit; your accountant, and for any fund purchase a licensed SMSF adviser, confirm the tax, superannuation and ownership detail before you commit.

A scenario worth considering

This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.

Situation: A 90-place centre in Melbourne's east, long-term tenant, landlord initiates a sale. The owner wants control of the site and to keep future expansion optional.
Objectives: Secure the freehold, keep cash drain low across the first 12 months, and hold flexibility to add a room later.
Options the owner would weigh:
- The property in a unit trust with a corporate trustee, leased to the trading company at market rent.
- An SMSF purchase with a bare trust, leased to the trading company, noting contribution and liquidity settings.
- A higher LVR using additional residential security to leverage your equity and reduce the cash deposit.
Indicative funding: Around 60 to 65 per cent LVR against the childcare freehold on a 20-year term, principal and interest, with additional residential security an option to reduce the cash deposit, subject to lender appetite and valuation. The settlement timeline would map to due diligence and valuation, with a working capital buffer available upon settlement.
Serviceability settings: Interest only for a period during any minor refurbishment, then reverting to principal and interest.
How we would approach it: The owner would choose the structure with their accountant; we would map the lender targets, terms, and rent-setting for the internal lease, and support the valuation. The figures above are illustrative, not confirmed outcomes.

Finance types available for childcare and early learning businesses

Asset finance for childcare equipment: Fund playground upgrades, shade structures, commercial kitchen, security and access control, solar, and centre technology. You can arrange childcare centre equipment finance without draining reserves.
Fit-out and refurbishment finance: Pay for room reconfigurations, bathrooms, acoustic works, soft-fall, and compliance-driven upgrades without draining cash reserves.
Working capital loans: Arrange working capital for a childcare centre to smooth payroll, utilities and supplier payments during enrolment ramp-up or seasonal movements.
Business overdraft: Cover short timing gaps between fee billing, CCS receipts and direct debit cycles.
Refinancing and debt consolidation: Replace scattered equipment leases and short-term debt with a clearer facility and improved cash flow control.
Construction and renovation: Fund a new centre build, car park changes, or an extra room to increase approved places.
Business or premises acquisition finance: Buy the freehold, acquire an existing service, or buy out a partner with a structure aligned to your goals.

These facilities interact. Owning the premises can free equity for future works, and a refinance can consolidate short-term facilities into a clearer structure.

Specialist finance for childcare centre premises

Ardent Capital Group specialises in commercial mortgages for childcare and early learning operators. We arrange and structure finance around how you plan to hold and occupy the property, including internal lease design and serviceability settings.

We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas. We have helped facilitate over $500M in funding over a decade for over 1,000 borrowers.

If you want a clear, specialist view of your options, talk to us. Ardent Capital Group is a specialist in commercial mortgages, and our team focuses on structure, strategy and optimal financial outcomes for the years ahead, not just this settlement.

Frequently asked questions

What deposit do I need to buy my centre's freehold? For an owner-operator childcare freehold, most lenders sit around 60 to 65 per cent LVR, so plan for a 35 to 40 per cent deposit. Investment centres generally sit around 55 to 65 per cent. Adding security you already own can lift the funded amount.

How is rent set between my property entity and my trading company? Use a market rent supported by valuation evidence, with clear annual reviews. Lenders assess serviceability against both entities, so the rent must be defensible and cash flow aligned.

Can an SMSF buy my centre's building and lease it to my business? Commercial premises typically qualify as business real property. An SMSF can buy the freehold and lease it to your trading entity at market rent, generally around 65 to 75 per cent LVR, subject to super rules, contribution caps and liquidity management.

Do lenders prefer an owner-occupied freehold or a third-party tenant? For trading operators, owner-occupation is generally viewed favourably due to lower vacancy risk and stronger control. For investors, a long lease to a proven operator with fixed reviews is attractive.

How do lenders assess childcare serviceability? They look at historic and current occupancy, fee revenue mix, CCS exposure, wage and rent ratios, EBITDA, and debt coverage under stress rates, alongside director commitments.

What property features help valuation and funding? Strong catchment demographics, 70 to 120 approved places with efficient room configuration, compliant design and outdoor areas, safe traffic and parking, and minimal immediate capex needs all help support value and lending.

Written by

Nick Chong

Managing Director, M.AppFin, Dip. Mortgage Mgmt

Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.