How does non-bank lending differ from bank lending?
The Australian property finance market offers developers two broad categories of funding: traditional bank lending through authorised deposit-taking institutions (ADIs) regulated by APRA, and non-bank lending through alternative finance providers regulated by ASIC. While both serve the same fundamental purpose of providing capital for property projects, they differ in several important ways.
Speed of assessment and approval
Traditional banks typically operate within structured approval frameworks that may involve multiple levels of credit committee review. This process can take several weeks or longer. Non-bank lenders, by contrast, often have more streamlined assessment processes with direct access to credit decision-makers, enabling faster turnaround times that can be critical for time-sensitive property transactions.
Flexibility in credit assessment
Banks generally apply standardised lending criteria that may not accommodate the full range of property development scenarios. Non-bank lenders apply their own documented assessment criteria, which may allow them to consider project-specific factors, borrower experience, and the underlying quality of the security on a more individualised basis.
Pre-sale requirements
Many traditional banks require developers to achieve a specified level of pre-sales before they will fund construction, often covering 80 to 100 per cent of the senior debt. Non-bank lenders may apply lower or more flexible pre-sale requirements, assessing each project on its individual merits and feasibility rather than applying a rigid pre-sale threshold.
Loan-to-value ratios and pricing
Bank construction loans typically offer lower interest rates but may cap LVRs at 60 to 65 per cent of total development costs. Non-bank lenders may offer higher LVRs, sometimes up to 75 to 80 per cent, reflecting a different risk appetite and pricing structure. The higher cost of non-bank finance is often offset by the reduced equity requirement for the developer.
When to consider non-bank lending
Non-bank lending may be appropriate when a project falls outside standard bank criteria, when speed of execution is important, when pre-sales are limited, or when the developer requires a more flexible capital structure. Many experienced developers use a combination of bank and non-bank finance across their portfolio of projects.
Related resources from Granor Capital
For Brisbane-specific guidance, read our article on construction loans in Brisbane. Learn how to apply for a development loan or explore what non-bank lending is and why it matters. Apply for non-bank finance with Granor Capital.
This article is provided for general information purposes only and does not constitute financial advice.
