Property-secured finance for childcare centre operators and freehold owners

Childcare is two businesses sharing one building. One is the operator: the approved provider that employs educators, holds the service approval and runs the rooms. The other is the freehold owner: often an investor who built or bought the centre and leases it to an operator for years at a time. Sometimes one family owns both.

Each side meets moments where the bank can’t move as fast as the deal. An operator buying a centre must line up settlement with a regulator’s transfer timetable. A freehold owner whose tenant leaves can find the bank suddenly less keen. Property equity, from the centre itself or from a home or investment property, can carry both through.

When do childcare operators and owners need short-term funding?

Who	Funding moment	Typical structure	Usual exit
Operator	Buying an existing centre business	Second mortgage or caveat over a home	Bank business loan after the first trading months
Operator buying freehold too	Business plus building together	Private first mortgage over the freehold, top-up security for costs	Bank commercial loan
Operator	Room, kitchen or playground upgrades	Second mortgage or caveat	Refinance once occupancy lifts
Operator	Wages, super and an ATO balance in a tight term	Caveat	Trading income over the term
Freehold owner	Tenant leaves; bank asks to reduce debt	Private first mortgage	New lease then refinance, or sale
Freehold owner	Deposit on another centre	Second mortgage or caveat over the first centre	Bank loan on settlement

For buying the business and the building together, see our page on freehold going concern purchases. For the business alone, buying a business with property security covers the general approach.

How does the 60-day approval transfer affect a centre purchase?

Under the National Quality Framework, a service approval can be transferred from one approved provider to another, but not instantly. ACECQA’s guide says the transferring and receiving providers must jointly notify the regulatory authority at least 60 days before the transfer is to take effect. In Western Australia the period is 42 days. A shorter period is only agreed in exceptional circumstances.

That gives a buyer a fixed date to work to, and it’s often the bank that can’t meet it. Credit teams may want a full set of figures, a lease review and building reports before they commit, and those take time. A private loan can settle on the transfer date, with the bank refinance following once the centre has a few months of results under the new owner.

The buyer also needs its own separate provider approval, so start that early. A loan doesn’t help if the regulator hasn’t approved the incoming provider.

How it works for a childcare business

1. Enquire in a minute. The property, what’s owing, the amount, the purpose and the date you’re working to. No credit check.
2. Talk to a specialist about the security, structure and repayment plan.
3. Indicative terms and then a Letter of Offer setting out the pricing, fees and conditions.
4. Documents and signing, including trustee signatures where a family trust owns the freehold.
5. Settlement on the agreed date, with funds paid to the vendor, the builder or the business account.

The pillar on secured business loans explains the three structures in more detail.

Who it suits

• Operators buying a centre with a firm transfer date and property equity to offer.
• Freehold owners holding an empty or under-let centre who need time to sign a new operator. Our vacant commercial property loans page covers that problem.
• Groups expanding to a second or third site and using the first centre’s equity, typically via a second mortgage on commercial property.
• Operators funding compliance upgrades who want repayments paused with prepaid interest or capitalised interest.

When this isn’t the right move

• Occupancy is falling for structural reasons. If a new centre nearby has taken your families or the suburb’s demographics have shifted, borrowing to hold on may only delay a sale.
• The buyer isn’t approved. Without provider approval and the transfer in hand, settling a purchase can leave you owning a centre you can’t operate.
• You need permanent funding. A long-hold freehold is better on a bank loan once the lease is in place.
• The money is for personal use. These loans are for business purposes only.

How does a private loan compare with other options?

Option	Speed	What it relies on	Watch-outs
Property-secured private loan	Possible within 24–48 hours once documents are in	Property equity and a clear exit	Costs more than a bank; keep the term short
Bank business or commercial loan	Weeks to months	Trading figures, lease, building reports	May not meet a regulator-driven date
Vendor finance	Negotiated	The vendor’s willingness	Ties you to the seller; see vendor finance vs a private loan
Equity partner	Slow	Giving up ownership	Permanent cost
Selling another property	Months	A buyer	Final, and often slower than the transfer window

Is the GST treatment worth checking first?

Yes. The ATO lists some childcare services as GST-free, which affects how a centre reports on its BAS. When a centre changes hands, the sale can be GST-free as a going concern if it is for payment, the buyer is registered or required to be registered for GST, and both parties agree in writing; the ATO also expects the seller to keep running the business until the day of sale and to supply everything needed for it to continue. A freehold sold with an operator’s lease in place can raise different questions. Get your accountant to confirm the position before you settle the loan amount, because GST changes the cash you need on the day.

What does a lender look at in a childcare deal?

The property and the exit carry the decision, but childcare has a few details that shape both.

• For an operator: how many places the centre is approved for, current occupancy across the week, the remaining lease term and options, and the rent review clauses. A long lease with options makes a later bank refinance far easier.
• For a freehold owner: who the operator is, how long the lease runs, whether the rent is being paid on time, and what happens to the building if the operator leaves. A purpose-built centre in a growth suburb is easier to re-let than one in a crowded catchment.
• For both: whether the exit depends on something the regulator controls, such as a transfer or a new approval, and how much time the term allows if that slips.

Being ready with the lease, the occupancy summary and the transfer paperwork turns a two-day assessment into a same-week settlement.

What it costs (without the guesswork)

Pricing is set deal by deal, on the security, LVR, term and exit, with the aim of the sharpest outcome your situation supports. You’ll see interest (prepaid or capitalised where that suits), a small assessment fee that varies with the loan, and legal and registration costs. A first mortgage over a debt-free freehold generally costs less than a second mortgage or caveat behind a bank.

Documents you’ll need

• ID for every borrower, director, trustee and guarantor;
• the centre sale contract and the service approval transfer notification, if buying;
• title details and existing loan statements for each property offered;
• the operator lease if the freehold is tenanted, or the vacancy notice if it isn’t;
• recent BAS, management accounts and an occupancy summary;
• quotes for any upgrade works being funded.

How fast can it happen?

Funding is possible within 24–48 hours for up to $5m once documents are in, and amounts from $20k to $250k secured on property are possible the same day. With no formal valuation required, nothing waits on an inspection. The practical bottleneck is usually trustee paperwork, so locate the trust deed early.

What could the numbers look like?

Illustrative example: a Perth operator is buying an 80-place centre business for $1.1m, with the service approval transfer notified 42 days ahead of settlement as WA allows. The bank wants three months of trading under the new owner before it lends. The buyers own a home worth about $1.4m with $400k owing, and an investment unit worth about $600k with $250k owing. Net funds:

• Home: $1.4m × an illustrative 70% LVR band = $980k, less $400k owing = $580k behind the bank.
• Unit: $600k × an illustrative 70% LVR band = $420k, less $250k owing = $170k behind the bank.
• Combined headroom of about $750k; the buyers have $450k cash, so they borrow $700k across both properties for 9 months.
• Less capitalised interest (shown on the Letter of Offer), the assessment fee and legal costs, the loan plus their cash covers the price and settlement costs. After four months of results, the bank lends against the business and the private loan is repaid.

Operators around Perth’s growth corridors can read our Perth private lender page. Payroll pressure is covered on Payday Super and payroll.

See if you qualify

Make a quick enquiry with the property, what’s owing on it, the amount and your settlement or transfer date.

There’s no credit check to ask, your information goes to one direct lender rather than a panel, and a specialist reads it. Precise details about the property and its loans help us give you a firm answer the first time. Check what your property can fund.