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Development Finance

Can Private Lenders Fund Development Projects?

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Quick answer

Private lenders can often fund

65% 75%

Of the project cost or end value, depending on the deal

  • Indicative settlement speed 2 to 3 weeks
  • Common use case Complex deals
  • Typical focus Feasibility and exit
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Yes, private lenders can fund development projects, and in many cases they are used when a deal is too complex, too urgent, or too outside standard bank policy for a traditional lender to approve within the required timeframe.

Private development finance is commonly used for townhouse sites, subdivisions, mixed use projects, residual stock, land with a short approval pathway, or developments where presales, structure, timing or borrower profile do not fit a bank.

Unlike mainstream bank lending, private finance is usually more deal driven and can be structured around the project’s feasibility, security position, drawdown needs and planned exit strategy

What projects are funded?

Private lenders can fund a wide range of development projects, particularly where there is strong security, a sensible budget, and a clear path to repayment.

They are often considered for deals that need faster approvals, more flexible policy, or a lender willing to assess the whole scenario rather than a narrow checklist.

Projects commonly funded by private or non bank lenders include:

  • iconTownhouse and duplex developments
  • iconBoutique apartment projects
  • iconLand subdivisions and civil works
  • iconLand with approval upside or staged construction
  • iconMixed use or specialised projects
  • iconResidual stock or refinance of completed projects

How Development Finance Works

Private development loans are usually structured differently from standard bank facilities.

A private lender may fund land acquisition, refinance existing debt, cover construction costs, or combine multiple needs into one short term facility depending on the deal.

Typical private lender funding stages may include:

  • 01 Site acquisition or refinance
  • →
  • 02 Initial works
  • →
  • 03 Construction stage one
  • →
  • 04 Construction stage two
  • →
  • 05 Final works
  • →
  • 06 Sale or refinance exit

For construction deals, private lenders still commonly use progress inspections, quantity surveyor sign offs, staged drawdowns and controlled funding releases before the next advance is made.

Loan Size and Structure

Private development loans are normally assessed using one or more of the following:

Assessment 01

Loan to value or loan to gross realisation

Private lenders often look closely at current value, end value, and overall security coverage.

Assessment 02

Loan to total development cost and feasibility

They also assess total project cost, contingency, margin, exit timing and the borrower’s equity contribution.

Indicative private funding range 65–75%
  • Private lenders often fund complex or time sensitive projects
  • Borrowers still usually need meaningful equity, strong security and a credible exit

Private lenders can absolutely fund development projects, but they do not simply replace equity. They usually want a sensible leverage position, reliable reporting, and a realistic repayment plan before advancing funds.

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What Private Lenders Assess

Private lenders usually assess the whole deal rather than relying only on standard bank policy settings.

That means they still want detailed numbers, but they may be more open to unusual scenarios if the risk is understandable and the exit is clear.

A private lender will commonly assess:

  • iconSite value and security position
  • iconBuild cost and drawdown schedule
  • iconConsultant, approval and holding costs
  • iconSales strategy or lease up plan
  • iconContingency and cost overrun buffer
  • iconTotal development cost
  • iconGross realisation value or refinance value
  • iconBorrower track record and exit strategy
15 - 20 %
Even when a private lender is flexible, the project still needs to stack up. Strong feasibility, realistic end values, credible construction pricing and a defined repayment path remain central to approval.

Why Developers Use Private Lenders

Private lenders are often used when a developer needs speed, flexibility, or a more commercial approach to risk

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Speed

Private lenders can often move much faster than a bank, which matters when a site must settle quickly or a refinancing deadline is close.

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Flexibility

They may consider scenarios involving low or no presales, unusual ownership structures, recent credit issues, or staged exits that banks may decline.

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Deal specific assessment

Deal specific assessments often do not require pre sales depending on the lender and the overall strength of the deal

Common problems

Private lenders can help solve many funding problems, but they still decline deals where the numbers, security or exit do not make sense.

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The cost is higher

Private funding is generally more expensive than standard bank debt because the lender is taking more risk or moving faster.

This may still be worthwhile when:
  • icon Time is critical
  • icon The opportunity would otherwise be lost
  • icon A later refinance to a cheaper lender is likely
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Weak exit strategy

A private lender still needs to know exactly how the loan will be repaid.

Common concerns include:
  • icon Over optimistic sale prices
  • icon No refinance path for retained stock
  • icon Insufficient demand evidence
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Limited project visibility

Messy documentation, unclear builder arrangements, or missing consultant reports can slow or derail approval.

Private lenders can be flexible, but they still need a deal they can properly underwrite and monitor.
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Not every private lender suits every deal

Some private lenders focus on small residential projects, others on larger commercial or structured opportunities.

The solution is usually:
  • icon Matching the deal to the right lender type
  • icon Presenting complete information early
  • icon Structuring the finance around risk and exit
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Steps To Get Private Development Finance

Step

01

Prepare the site details, security position and development summary

Step

02

Complete your budget, feasibility, timeline and exit strategy

Step

03

Gather plans, approvals, consultant reports and supporting evidence of demand

Step

04

Confirm how much equity, cash contribution or additional security is available

Step

05

Present the deal to private or non bank lenders that actually suit the project profile

Step

06

After approval, funding may settle quickly and then be advanced in agreed stages until the project is sold, refinanced or otherwise repaid

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Speak with a Private Development Finance Specialist

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Private development finance can vary significantly depending on the leverage, security, construction risk, exit pathway and how urgent the transaction is.

A specialist can review the scenario and determine whether a bank, non bank lender, private credit fund or a staged funding structure is the better fit.

Speak with a finance specialist about whether a private lender suits your development project.

Submit the short form below and a specialist will review the deal, identify likely lender appetite and discuss possible private funding options.

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Additional Questions

You may also find these questions helpful

Helpful Property Finance Guide

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Guide to private construction funding

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Understanding non bank development finance

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How alternative property lending works

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Refinancing out of private debt

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