Commercial Construction Loans from $500k to $100m+

Most of the commercial construction loans from our extensive Australian lender panel require a 20-30% deposit of the total project cost, though this can vary based on your experience and the project specifics. If you’re an owner-occupier of the construction project, some lenders may accept a deposit as low as 15% if you have strong financials.

The deposit must cover both land (if not already owned) and construction costs. First-time commercial builders typically need higher deposits around 30-35%, while experienced builders with proven track records may negotiate lower requirements. Remember, your deposit also needs to cover stamp duty, legal fees, and initial construction costs before the first drawdown.

Your progress payments in commercial construction loans are set to be released at predetermined construction milestones, typically: slab down (15-20%), frame stage (20-25%), lockup stage (35-40%), fixing stage (20-25%), and practical completion (10-15%). Each drawdown requires an independent valuation confirming the required work has been completed.

Unlike residential construction, commercial projects can be more flexible around the drawdown schedule based on contractor payment terms. The key is making sure your cash flow aligns with these staged payments, as you’ll need to cover any gaps between contractor invoices and loan drawdowns.

Yes, commercial renovation loans or refurbishment finance is available from our lender panel for upgrading existing commercial properties.

These loans typically offer 70-80% of the total project value (combining the existing property plus renovation costs). Lenders will assess the current property value, renovation plans and scope, and projected value of the completed renovation. Major structural changes require detailed plans and council approvals, while cosmetic upgrades may have simpler approval processes. Commercial Interest Rates are usually 0.5-1% higher than standard commercial mortgages but lower than unsecured business loans.

Commercial construction loan interest rates are typically  0.75-2.00% higher than standard commercial property loans due to the increased risk. Current rates range from [sbp_rates_construction_range] depending on your experience, finances, LVR, and the complexity of the project.

One key feature to understand is that interest is only charged when you drawn down funds – it’s not charged on the full facility limit from day 1. This can significantly reduce costs during early construction stages. Most construction loans transition to standard commercial rates upon project completion which often means a saving of 1.00-2.00% annually, post-construction.

Of your project costs overrun, you’ll need to notify the lender immediately. This will usually mean a reassessment of the project. What happens next will be deetermined by the assessment but might include providing additional equity (most common), negotiating a construction loan top-up if the updated valuation supports it, securing mezzanine funding for the shortfall, or scaling back non-essential project elements.

As experienced commercial finance brokers, we always recommend a 10-15% contingency buffer in your original application. Lenders may approve increases up to 10% without full reapplication if you have strong financials and the project remains viable.

While fixed-price contracts significantly strengthen your application and are preferred by most lenders, cost-plus contracts are acceptable for experienced developers with strong track records.

Fixed-price contracts provide certainty for both you and the lender, which normally means you’ll get better loan terms and lower deposit requirements. If you choose to use a cost-plus arrangement, expect to provide detailed quantity surveyor reports, larger contingencies (15-20%), and potentially some personal guarantees. Some lenders specialise in cost-plus construction loans, but be prepared to pay a premium rate.

Commercial construction loan approvals typically take between 4 and 8 weeks from application to unconditional approval. This is significantly longer than standard property loans, and varies based on the complexity and value of your project.

The timeline often includes:

• initial assessment (3-5 days),
• valuation and quantity surveyor review (7-10 days),
• credit assessment (5-7 days),
• legal documentation review (7-10 days),
• final approval (3-5 days). 

Fast-track options exist for experienced developers with complete documentation which can reduce the approval timeframe to 3 weeks or less. We advise clients to start the application process during the planning/DA stages to ensure funds are ready when construction begins.

Yes, investment construction loans are available for ‘build-to-lease’ commercial projects.

Our lenders typically require a signed lease agreement, or some form of strong evidence of tenant demand before approving funds. A pre-lease agreement can significantly strengthen your application and can actually reduce deposit requirements to 20-25% in some cases. Without pre-commitments, expect to need to be able to provide a 30-35% deposit. The loan structure usually includes interest-only payments during construction which helps with cash flow, converting to principal and interest once tenanted and generating income.

Commercial construction loans require extensive professional documentation:

• quantity surveyor report outlining costs and progress payment schedule ($2,000-5,000),
• independent valuation showing “as if complete” value ($1,500-3,000),
• environmental site assessment for previously developed land ($2,000-8,000),
• structural engineering reports for complex projects ($3,000-10,000), and
• geotechnical reports for ground conditions ($2,000-5,000). 

You’ll also need a council-approved development application (DA), as well as you building contracts and architectural plans. 

We advise clients to budget about $15,000-30,000 for all professional reports on typical projects.

Owner-occupier construction finance often means getting away with lower deposit requirements (15-20%), attracting better interest rates (0.5-1% lower), and getting longer loan terms (up to 30 years). This is because lenders view owner-occupiers as lower risk (because you’re invested in the property’s long-term success).

To be eligible you’ll need to occupy at least 51% of the completed space. These loans can include fitout costs, allowing you to create purpose-built facilities. Some of our lenders offer integrated facilities combining construction, equipment finance, and working capital in one package.

Understanding GST treatment is crucial for your construction project. If you’re GST-registered and constructing commercial property for business use or sale, you can usually claim GST credits on construction costs (talk to your accountant to confirm). The margin scheme may apply if you’re selling completed properties, potentially reducing your GST obligations.

During construction, you’ll pay GST on progress payments, but you can claim quarterly BAS credits, improving your cash flow. Our lenders may offer you facilities to cover GST timing differences between payment and refund if that’s required. If you plan properly upfront you could effectively reduce your required deposit by up to 10% of construction costs.

Comprehensive construction insurance is mandatory (and just good practice). Your insurance policy needs to include:

• contract works insurance covering the building during construction (typically 0.3-0.5% of construction cost),
• public liability insurance minimum $20 million,
• builder’s warranty insurance where applicable,
• professional indemnity for design professionals,
• latent defects insurance for major projects. 

If you’re an owner-builder you’ll need additional coverage as you are assume builder responsibilities. Your insurance must be maintained throughout project with your lender noted as interested party. We advise clients to budget approximately 1-2% of construction costs for comprehensive insurance coverage.