How to secure business loan on property as a developer
Builders and developers borrow against property when a progress claim is certified but unpaid, retention is held past practical completion, or a variation is in dispute while wages fall due. HomeSec funds against the director's property rather than the project itself, from $20,000 to $5,000,000, generally within 24 hours, with no repayments for up to six months.
Developers and builders get offered the wrong product constantly, because most lenders hear “construction” and reach for construction finance. Often what is actually needed is much simpler.
Two different things, and the distinction is the whole point
Construction finance funds the build. It assesses feasibility, cost to complete, presales, and a quantity surveyor’s report, then draws down in stages against progress. Weeks to arrange, and appropriate when what you are funding is the project itself.
A property-secured business loan funds you, against equity in property you already own — usually the director’s home or an unencumbered site. It does not care what stage the project is at, because the project is not the security.
If your problem is a timing gap rather than a funding gap for the build, the second is faster, simpler and does not put the development under someone else’s drawdown schedule.
The three files we write most in this sector
A progress claim certified but not paid. The superintendent has signed it. The principal has not paid it. Wages fall due Thursday.
Retention held past practical completion. Contractually yours, practically somebody else’s problem to release.
A variation in dispute. The work is done and the argument is about price. It may take months to resolve and your suppliers will not wait.
In all three the exit is dated and documented, which is what makes them straightforward files rather than difficult ones.
Why the open term matters more here than anywhere
Nothing in construction runs to schedule. A lender that fixed your term at three months has a default on its hands when a claim is certified a fortnight late, and you have penalty interest and an extension fee on yours.
We do not fix the term. No minimum, no maximum, no penalty for repaying early, no fee to extend. Tell us the claim has slipped and we move with it, usually in one phone call. For an industry where slippage is the norm rather than the exception, that is the single most useful feature of the product.
What we need, and what we do not
Need: an active ABN, a business purpose, Australian real property with enough equity — to 80% of value on residential security or 70% on commercial — and a credible exit.
Do not need: financial statements, tax returns, BAS lodgement, a quantity surveyor, feasibility studies, presales, or a minimum trading period. We fund builders in their first year on the same terms as builders in their thirtieth.
Where we are the wrong lender
If you need funding for the construction itself — staged drawdowns against progress, with the completed value as the security — that is construction finance and we do not write it. Call a construction lender, and we will say so on the first call rather than after a week of your time.
Reviewed by Catriona Anderson, General Manager