What is Private Development Finance?
Private development finance is non-bank property funding for development-related scenarios such as site acquisition, pre-construction, stretched senior debt, residual stock or settlement gaps. It does not mean every project can be funded; lenders assess security, approvals, feasibility, borrower experience and exit.
This guide is written for Australian business borrowers and brokers. It focuses on practical lender assessment factors, realistic timing, documents, risks, costs and exit strategy rather than guaranteed outcomes or unsupported claims.
Who this may suit
This type of finance may suit borrowers with property security, a defined business or investment purpose, and a credible plan to repay or refinance the loan.
Small developers needing acquisition or pre-construction funding.
Borrowers holding residual stock while arranging sale or refinance.
Projects where bank timing is too slow or policy does not fit.
Experienced borrowers with a clear feasibility and exit.
When it may not suit
Short-term property-secured finance may not suit every borrower. The risk rises where the purpose is unclear, the exit relies on hope, or property would be exposed without a realistic repayment pathway.
- It may not suit projects without approvals, feasibility or experienced management.
- Planning delays, cost overruns and sales risk can make short-term debt dangerous.
- Private finance may not cover all construction funding needs.
- Borrowers should seek legal, valuation, tax and project advice.
How it works
The process usually starts with the funding need, then moves through security review, document collection, lender assessment, legal documents and settlement if conditions are satisfied.
Define the project stage and funding gap.
Provide site, planning, feasibility and ownership documents.
The lender assesses security, approvals, costs, borrower experience and exit.
Terms may be structured around acquisition, bridging, residual stock or refinance.
Settlement occurs only if conditions and legal documents are satisfied.
Development funding stages
Diagram showing acquisition, approvals, pre-construction, construction, residual stock and exit stages.
Site purchase or settlement
Planning, feasibility and project risk
Bridge to senior or construction funding
Sale, refinance, completion or residual stock
Different development stages create different lender questions and risks.
What lenders usually assess
Lenders usually assess the security, borrower, loan purpose, existing debt, urgency and exit strategy. A stronger file explains both why funds are needed and how the loan will be repaid.
Site location, title, planning status and market demand.
Development approvals, feasibility, budget and contingency.
Borrower/developer experience and project team.
Presales, valuation, residual stock position or sale evidence where applicable.
Exit through sale, refinance, construction facility or project completion.
Documents commonly requested
Document requests vary by lender and scenario, but the borrower should be ready to prove identity, property ownership, existing debt, business purpose and exit evidence.
- Contract of sale, title and planning documents.
- Feasibility, cost plan and development approval if available.
- Valuation, sales evidence or residual stock schedule.
- Borrower ID, company/trust documents and project team details.
- Exit evidence such as presales, refinance correspondence or agent appraisal.
Costs, risks, and exit strategy
The safest short-term finance file is not only fast; it also has a realistic exit, transparent costs and a borrower who understands the consequences if repayment is delayed.
- Model finance cost against project margin and contingency.
- Avoid short terms that do not match planning or settlement reality.
- Prepare for valuation, legal and quantity surveyor requirements where needed.
- Have a fallback if sales or refinance are delayed.
Alternative development funding paths
Alternatives should be compared before taking property-secured finance, especially where a slower or lower-risk option can solve the same problem.
| Option | Why it may matter |
|---|---|
| Option 1 | Bank construction finance where project metrics fit. |
| Option 2 | Private first mortgage for site acquisition or residual stock. |
| Option 3 | Mezzanine-style funding where senior debt exists and equity remains. |
| Option 4 | Equity partner or asset sale where debt risk is too high. |
Hypothetical example: pre-construction bridge
The scenario below is hypothetical and simplified. It shows how a borrower might think about purpose, security and exit without implying approval or a particular outcome.
A small developer has acquired a site and expects bank construction approval after final documents are issued. A private facility may bridge the pre-construction stage if the site, approvals, feasibility and bank exit are credible.
Frequently asked questions
What is private development finance?
It is non-bank property-secured funding for development-related scenarios, assessed against site, approvals, feasibility, experience and exit.
Can it fund construction?
Only if a lender specifically offers and approves that structure. This page does not imply construction funding is always available.
What documents matter most?
Planning documents, feasibility, valuation, cost plan, title, borrower structure and exit evidence are usually important.
Can residual stock be financed?
It may be considered where completed stock has value and a sale or refinance exit is credible.
Do presales matter?
They may matter depending on the stage and lender. Presales can support demand and exit, but requirements vary.
What is the biggest risk?
Project delays, cost overruns, valuation changes and weak sales can make short-term private debt expensive and risky.
Talk through the scenario before you commit
If the timing, security position or exit feels complex, send the details through the borrowing-power form or call the team before making a decision.
Important finance disclaimer
This information is general in nature and does not take into account your objectives, financial situation, or needs. Finance is subject to lender assessment, security, valuation, legal documentation, fees, and suitability checks. Seek independent legal, financial, and tax advice where appropriate.