Commercial Construction Loans Australia 

Australia’s construction industry accounts for 13% of Australia’s GDP (contributing around $400 billion to the Australian economy) and provides one in ten Australian jobs. Despite the enormous size of the biggest players, small businesses actually make up around 98% of all Australian construction businesses. Some 360,000 small businesses are estimated to play their part in the construction industry and could be interested in commercial construction loans. One of the most common reasons cited for construction projects failing is due to cash flow difficulties.

Small businesses don’t usually receive payment until the construction project is complete, this is where a commercial construction loan (a form of asset finance) could be of use. Discovering the best  construction loans in Australia can prove in handy – so view our comparison below of the best options.

Construction Loans: The Base Figures

Loan TypeSecuritiesTermsAvg Loan SizeEstimated Interest Rate
Construction LoanAsset1-7 years$100,0001.6%-15%

Best Construction Loans in Australia

#1 Fast Multi-Application

Est. 2014

Loans size & Terms

Secured and Unsecured Loans, Line of Credit, Business Overdraft, Equipment Finance

Lend Business Loans Review
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  • Fully Online System
  • High Variety of Lenders
  • Construction Loans Specialists
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#2 Capify: Veteran Lender with a Diversified Offering

Capify understands construction and building small businesses are often not paid until a building contract is complete, and there is potential for construction companies to have a negative cash flow during the operation of a project. Capify provides both short term and long-term solutions towards financial strained businesses in the construction and building industry with access to funds in as little as 24 hours.

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Expedited Application

  • Fewest documents required for sign up
  • Industry veteran for 17 years
  • the FIRST Australian online business lender
  • 99% positive client reviews
  • Multiple banking awards
  • More than $500,000,000 in funding since inception
  • Global brand
  • Min monthly turnover $10,000
  • Smaller scale than Prospa
  • 3% origination fee
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#3 Unsecured Line of Credit for SMEs

ZipBusiness, previously SpotCap, provides versatile construction loans for businesses in Australia. Offering alternative, unsecured loans can be a better option for tradies. Either helping firms to boost their services or keep a steady cash flow during the off season.

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  • Unsecured Line of Credit
  • Highest Loan Amount of All Lenders
  • Clear Terms and Conditions
  • Reply Within 24h
  • All Client Reviews are Highly Positive
  • Avg Interest Rate ~10%/yr
  • High Requirements - Min. 200,000 annual turnover
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How Do Construction Loans in Australia Work?

Construction loans are usually taken on a short to mid term basis with a repayment schedule of roughly a year. This will vary however depending on your individual circumstances and the scope of the construction project.

The construction loan is intended to cover the costs of building a structure on an undeveloped property. The amount of finance offered will also be dependent on the projected value of the property once development is complete (gross development value or GDV). The property will be used as a form of security in order to secure the loan.

Once the development is finished, the property will either be sold or the construction firm will receive complete payment for the project and the construction loan can be repaid. 

It can be quite common for construction loans to be released in stages, following the progression of the project:

  1. Initial sum on loan approval
  2. Completion of foundation
  3. Completion of structure framing
  4. Completion of roof and walls

Different terms can be negotiated with lenders but it’s important to determine exactly where each stage starts/finishes so you are absolutely sure when your next injection of cash will be released.

Our Take on Why Australia’s Construction Business Will Boom in 2021, and How Financing Will Become More Difficult to Obtain

Australia PCI has contracted more than 20 points for April 2020, representing its lowest-ever value, wrecking havoc over the industry. No one would have thought an almost complete recovery of the PCI is possible by July and that by March of 2021, the PCI would almost triple itself and reach its highest point ever – in a similar trend to what’s happening in the U.S, UK and Europe.

In fact, it is now speculated that after the pandemic is over from western countries, the current global real estate boom will also lead to a construction boom.

Combine the above with supply chain destructions and inflationary concerns, and you’re in for a potential perfect storm that will lead construction companies to borrow short-term funds to meet the supply. If inflation will rear its ugly head, and with it interest rates will rise, we’ll be looking at many construction businesses in Australia trying to refinance their debt to keep afloat.

In either case, this is going to be a massive year for non-bank construction financing. Lend, Australia biggest loan matcher, is constantly building up its list of lending partners in this specific sector of construction finance.

Commercial Construction Loans Comparison & What To Expect

If your business has a concise construction plan, including construction timelines, a realistic Gross Domestic Value (GDV) assessment and a good credit history, it is possible to secure construction finance in as little as 24-48 hours. If your project is considered more risky and larger than your normal projects it can take longer. That’s not to say it’s not possible though as one of the biggest benefits to commercial construction financing is it can allow businesses to take on larger projects and reach a new level. 

Construction loans rates vary depending on the scope of the project and the individual risk profile but most lenders will be happy to provide a loan around 70 per cent of the GDV if approved. Like other business loans, construction loans can come with arrangement fees, early-exit fees and valuation fees if necessary. That is why it’s important to compare small business loans providers.

Is Security Required For Commercial Construction Financing?

The property you are building or upgrading in your construction project will act as security in the financing process. Very rarely will you have to provide additional forms of security for a construction loan.

Construction Invoice Factoring

Construction invoice factoring works just like any other form of invoice finance. The facility allows construction companies to access money from unpaid invoices prior to the original due date of client invoices, albeit at a small discount. The reason many lenders will specifically call it ‘construction invoice factoring’ is they know it can be particularly useful for construction companies as the industry traditionally settles invoices much slower than other industries.

Construction invoice factoring essentially allows you to advance the majority of your payments (usually around 80-90% of the value of the unpaid invoices) that you are expecting to receive for jobs you have completed. So you don’t have to wait the full 30, 60 or 120 days for payment. Once the payment terms are up and the lender receives the full value of the invoice, you’ll receive the rest of the unpaid balance of the invoice, less the lender’s fees.

Having immediate access to cash allows construction firms to pay staff, purchase raw materials, hire equipment and pay its own suppliers. It may be you can even outsource the account receivables process so you can focus more of your time on construction and less time chasing invoices. The solution is also scalable because as the size of your invoices grow, naturally the amount you can receive through commercial invoice factoring grows too. You won’t have to worry about renegotiating any debt facilities with your lender.


Alternative Forms of Commercial Construction Financing 

There are a variety of other financing solutions available which can be of a major help to construction firms. If you need additional equipment, such as construction machinery or company vehicles, then equipment financing could be an appropriate solution.

Other types of finance, including unsecured business loans can also be used to raise money for construction projects. However, you will need to check if the repayment terms are suitable for a project that will not generate income for some time. 


Final Words: Are SME Commercial Construction Loans Viable?

For businesses operating in the construction and building industry, it is of vital importance to keep consistent cash flow throughout a construction project. Man hours, machinery costs and raw material costs are pre-planned but inevitably projects will sometimes go over budget. Being unable to finish a project can obviously have dire consequences on revenue and your reputation as a business.


Commercial construction loans can be of a huge benefit in maintaining cash flow throughout a project and in growing your business to levels never achieved before. For some construction firms or particular projects it can be difficult to attain dedicated construction loans so it may prove worthwhile considering alternative forms of construction financing such as unsecured business loans or equipment financing. If you have a number of unpaid invoices from previous construction projects then construction invoice factoring could easily generate cash flow right away.