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Development Finance

Types Of Development Lenders

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Quick answer

Most developers compare

3 core lender types 4 main funding layers

Across Australian development finance deals

  • Bank lenders Lower cost
  • Non bank lenders More flexible
  • Private and mezzanine funders Higher leverage
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Development finance in Australia can come from several different lender types, each with its own appetite for risk, leverage, pre sales, experience and speed.

The right lender often depends on project size, location, approvals, equity position, timeline and whether the deal needs straight senior debt or a more layered capital structure.

In practice, developers may use a bank, non bank lender, private lender, mezzanine funder or a combination of several depending on how the project stacks up.

What types of development lenders are there?

The Australian market is not made up of one single style of development lender.

Most transactions are funded by a mix of senior lenders, alternative lenders and equity style capital, depending on the project and the developer’s position.

The main lender categories developers commonly come across include:

  • iconBanks and major authorised lenders
  • iconSpecialist non bank development lenders
  • iconPrivate lenders and mortgage funds
  • iconMezzanine finance providers
  • iconJoint venture or equity partners
  • iconStretch senior and hybrid structures

How Development Lender Types Compare

Different lender categories solve different problems.

Some focus on price and conservative policy, while others focus on flexibility, higher leverage, lower pre sale hurdles or faster execution.

A simplified market view looks like this:

  • 01 Banks
  • →
  • 02 Non banks
  • →
  • 03 Private lenders
  • →
  • 04 Mezzanine funders
  • →
  • 05 JV equity partners
  • →
  • 06 Exit lenders

The best fit usually comes down to the balance between cost, leverage, conditions, timing and the exit strategy.

Bank Versus Alternative Lenders

Most developers are really choosing between two broad senior debt paths:

Method 01

Bank development lenders

Usually lower cost and more conservative, with tighter requirements around equity, pre sales, experience and documentation.

Method 02

Non bank and private lenders

Usually more flexible on structure, timing and policy, but often at a higher cost than traditional bank funding.

Typical lender trade off Cost vs flexibility
  • Banks generally offer sharper pricing but stricter policy
  • Alternative lenders generally offer more flexibility but higher pricing

Many strong projects still start with a bank enquiry, but deals with tight timing, lower pre sales, unusual security or limited track record often move toward non bank or private development lenders.

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What Each Lender Type Assesses

Regardless of lender type, development funders still want to understand whether the project can be completed and repaid.

The difference is how strict they are, and which risk issues they are most willing to tolerate.

Across the market, lenders commonly assess:

  • iconDeveloper experience and track record
  • iconSite value, title and security position
  • iconTotal development cost and contingency
  • iconGross realisation value and end debt cover
  • iconPre sales and sales evidence
  • iconBuilder strength and contract structure
  • iconPlanning approvals and consultant reports
  • iconExit strategy and timeframe
4 types
In most real world scenarios, developers compare four main funding paths first: banks, non banks, private lenders and mezzanine providers. Joint venture equity can then be added where the capital stack still has a gap.

The Main Development Lender Types

The core lender groups usually differ most on price, leverage, presales, speed and complexity

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Banks

Best suited to cleaner projects with stronger equity, better presales, solid experience and enough time for a more detailed credit process.

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Non bank lenders

Often suit small to mid sized projects where flexibility matters more, especially where a bank is too slow or conservative on policy.

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Private and mezzanine funders

Usually used where the deal needs speed, higher leverage, second mortgage capital or a bespoke structure that sits outside standard bank policy.

Common lender selection mistakes

Many developers do not have a bad project. They simply approach the wrong lender type first and lose time.

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Going to a bank too early

A bank may be ideal later, but not before the project has enough approvals, presales, equity or supporting documents.

Possible solutions include:
  • icon Use the lender type that matches the project stage
  • icon Workshop likely policy hurdles first
  • icon Do not assume all lenders view risk the same way
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Choosing only on interest rate

The cheapest lender is not always the best lender if the policy settings do not match the project.

Possible solutions include:
  • icon Compare cost against leverage and conditions
  • icon Factor in fees, time and certainty
  • icon Look at the whole funding outcome, not just rate
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Ignoring the capital stack gap

Senior debt may not be enough on its own, which is why some deals need mezzanine or JV equity layered behind it.

Possible solutions include:
  • icon Model senior debt separately from extra capital
  • icon Test equity, mezzanine and JV options
  • icon Understand who sits first and second in security
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Not planning the exit lender

A project funded by a private lender may still need a refinance or development exit strategy before all stock is sold.

Possible solutions include:
  • icon Plan sale, refinance or residual stock exit early
  • icon Check whether the term is long enough
  • icon Make sure the repayment path is credible
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How To Choose The Right Development Lender

Step

01

Define the project size, timing, approvals and intended exit

Step

02

Work out how much equity, presales and documentation are actually in place

Step

03

Compare whether the deal fits bank policy or needs alternative funding

Step

04

Identify whether senior debt alone is enough or if mezzanine or JV capital is required

Step

05

Approach lender types that genuinely suit the project instead of sending the deal everywhere

Step

06

Select the lender structure that gives the best balance of certainty, cost and completion risk

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Speak with a Development Finance Specialist

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Each development lender type has its own credit policy, risk appetite and commercial logic.

A specialist can help identify whether your project is better suited to a bank, non bank lender, private funder, mezzanine provider or a blended structure.

Speak with a finance specialist about the right lender type for your project.

Submit the short form below and a development finance specialist will review your scenario and discuss which lender categories may suit.

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