Private lender for property developers in Australia: bank, non-bank or private?

Most small developers ask “which lender?” before they’ve asked “which part of the project am I funding?” That’s backwards. Banks, non-banks and private lenders each fund a different slice of a development, and each looks at a different thing: presales, track record, or the property and the exit. Pick by the slice, and the lender usually picks itself.

This guide sets out what each type asks of a small Australian developer, what has changed in 2026, and how developers sequence them across a project.

What does each lender type want from a small developer?

	Bank	Non-bank (specialist)	Private lender secured on property
What it mainly funds	Construction, staged draws	Construction and land, sometimes with fewer presales	Site deposits, holding costs, DA and soft costs, residual stock, land banking
What it leans on	Presales, feasibility, valuation, experience	Feasibility, experience, some presales	Equity in the security property and your exit
Valuation	Formal valuation, usually on a bank’s panel	Formal valuation	No formal valuation required with us
Speed	Slowest; credit committees and conditions	Faster than banks	Funding in as little as 24 hours from a clean, complete scenario
Typical weak spot	Thin presales, a first project, a late DA	Complex or unusual projects	A weak or undefined exit

Treat the table as a rule of thumb, not a guarantee. Each lender’s policy differs, and policies shift with the market.

Why do banks insist on presales?

Presales are a bank’s proof that the finished units will sell. They are also written into how the bank’s own capital is calculated. Under APRA’s current rules, a residential development loan qualifies for the lower risk weight only when presales cover the debt, so banks have tended to ask for presales covering all of it.

That is under review. In June 2026 APRA put forward changes that would halve the qualifying presale level from 100% of total debt to 50%. BrokerDaily reported that submissions close on 7 September 2026, APRA intends to finalise the changes in the second half of 2026, and the proposed start date is 1 April 2027. It’s still a proposal. Don’t plan a project around a rule that hasn’t been made, but if it goes ahead, banks may be a little more open to projects that are only partly presold. Watch APRA’s publications for the final version.

What did ASIC say about development lending in 2026?

ASIC’s attention is on private credit funds, and property development is where it sees the most strain. Following a snap review of 52 private credit funds, ASIC pointed to rising debt servicing costs, build cost escalation, project delays, weak presales, unsold stock and tougher refinancing as risks, according to Clayton Utz’s summary. Its earlier REP 814 estimated the sector at about $200 billion, roughly half of it in real estate lending.

What that means for a borrower in practice:

• Expect questions about your exit. Lenders under scrutiny want to see a plan that doesn’t rely on a perfect market.
• Read the full fee picture. Our guide to private mortgage costs lists the lines to look for.
• Know who you’re borrowing from. The questions in how to check a private lender apply whatever the label on the door says.

For the wider market picture, see our private credit overview for 2026.

Why does the funding gap around construction matter?

A construction loan doesn’t pay for everything that happens before and after the build. Developers regularly need cash for:

• the site deposit at exchange, before any bank has approved the loan;
• DA, consultant and holding costs while approvals work through;
• the equity contribution a bank requires on top of its loan;
• residual stock left unsold after practical completion, when the construction loan is due.

None of those suits a bank’s construction product, and several come up on a timetable a bank can’t match. If one of those is where you’re stuck right now, see if your property can cover it. Our pages on site deposit funding, pre-construction costs and residual stock loans cover each one. The comparison between the construction product and property-secured funding is on construction loan vs property-secured developer funding.

Cost pressure makes the gaps wider. Construction was again the hardest-hit industry for company insolvencies in FY2025-26, with Accountants Daily reporting 3,472 construction companies entering external administration, a provisional figure from ASIC data. A lender or a builder who’s nervous about the sector asks more questions, and a project with no cash buffer feels it first.

Which lender first? A sequence that works

1. Settle the feasibility. Every lender will want it. If the numbers only work with a perfect sale price, no lender type fixes that.
2. Decide what you’re funding now. If it’s the site and soft costs, you’re looking at property-secured funds. If it’s the build, you’re looking at a bank or specialist non-bank.
3. Ask the bank early, even if you expect to be declined. A decline tells you what it needs: more presales, a longer track record or a bigger equity contribution.
4. Use private funds to close the gap, not the whole project. Securing the site or covering holding costs while the bank’s conditions are met is the typical use.
5. Fix the exit before you borrow. Sale of stock, a refinance to a bank on completion, or a sale of another property. Our guide to exit strategies for a short-term mortgage shows how to test each one.

What mistakes cost developers the most time?

• Going to the bank last. A bank decision can take weeks, and a deposit date won’t move. Start the bank conversation early and run private funding in parallel for the slice that can’t wait.
• Borrowing for the whole project privately. Private funding is short-term and priced for that. Used to carry a build for a year or more, it becomes the most expensive part of the project. Our total cost of a short-term loan guide shows how to compare it properly.
• Securing over a property you may need to sell. If the property backing the loan is also your fallback exit, you’ve used it twice. Keep the two roles separate.
• Ignoring the ranking. If the bank’s construction loan will take first position over the site, a second private charge over that same land needs the bank’s consent. Read first mortgagee consent before you assume it’s possible.
• Leaving GST until settlement. Margin scheme or not, the GST on sales changes the net you actually receive. Our guide to GST and the margin scheme covers the basics so your exit figure is net, not gross.

Illustrative example: a small developer with partial presales

Illustrative only. The people, property and figures are invented.

A developer owns an unencumbered industrial unit worth around $1.2m. They’ve exchanged on a site for three townhouses, with a deposit due in two weeks, and have presold one of the three. A bank has said it will consider a construction loan but wants more presales and its own valuation first.

At the 70% commercial ceiling, borrowing against the unit could support up to $840k. The developer takes a smaller first mortgage over the unit, comfortably inside that limit, to cover the deposit and DA costs, with interest capitalised for the first six months so there are no repayments during the lead-in. Their plan: add presales over the next few months, go back to the bank with a stronger application, and repay the private loan from the first construction draw or the sale of the unit if the project stalls.

They’ve kept the private loan to the pre-construction slice and left the build to the bank. That separation is what keeps the exit credible.

What do private lenders ask that banks don’t?

Less about the project, more about the property and the way out:

• The security. Title details, what’s owing on it, and who owns it (company, trust or you). See how private lenders assess a loan.
• The exit. In plain words, with a date or a trigger.
• The paperwork. A shorter list than a bank’s. Our documents for a private mortgage guide has it.

A weak exit is the most common reason a private deal doesn’t proceed, so take it seriously. Exit strategy red flags lists what lenders worry about.

Which private lender for your project? Let’s find out

You don’t need to choose a lender type before you talk to anyone. If you own property with equity and the project needs money before or after the bank’s build loan, a conversation about the security and the exit will show quickly whether private funding fits.

Enquiring takes about 60 seconds, and there’s no credit check for asking, so your credit file is left alone. We don’t pass your details to a pile of lenders; your enquiry goes to one direct lender. A real person reads your situation and calls you. Please fill the form in accurately, covering what you own, what’s owing and what the money is for, so the first call can be useful.

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