Prime Capital launches a new construction loan amid modest market demand and tighter developer financing conditions.
The new construction finance product – dubbed "Business Builder" – is designed to support small and medium-sized developers seeking funding. It is backed by Prime Capital’s warehouse facilities.
“At Prime Capital, we’re making construction finance fast, simple and certain," Steve Sampson, chief executive officer of Prime Capital, told Australian Broker. "Identifying and addressing gaps in traditional banks' lending preferences is one of our core growth strategies. Our newest offering is specifically crafted to support construction projects that require financing between $1 million and $10 million. This initiative was born from a substantial number of inquiries within this range, highlighting a clear market need. Through thorough market research, we recognized a prime opportunity to serve this segment.
"Unlike lenders that depend on private or consumer capital, our funding is secured through institutional warehouses, ensuring a consistent and reliable source of capital," Sampson said.
The Sydney-based non-bank lender added the construction finance sector is often plagued by delays and uncertainty. In contrast, its new construction loan product offers more predictable funding and a simplified settlement process, with low-doc requirements and no pre-sale conditions. Developers can instead rely on self-declared income, allowing for faster access to capital.
"We have noticed that smaller construction projects face numerous hurdles and complexities," Sampson said.
By contrast, Prime Capital offers approvals in as little as 24 hours, with settlements generally completed within three to four weeks. Interest rates start at 9.5% and loans cover up to 80% of total development costs.
Meanwhile, Australia's construction sector continues to post modest growth, which has created opportunities for both lenders and brokers. The total construction market is expected to grow about 3.8% in 2025, according to a recent report by data advisory firm Research and Markets, thanks to renewed investments in infrastructure, renewable energy and the continued need for housing. The same report found that construction is expected to further grow by another 3% from 2026 to 2029.
Sampson said Australia's construction industry is "definitely a hot topic" right now.
"The shortage of housing to accommodate our growing population is well-documented and likely represents the most significant challenge for the Australian government," the CEO said.
Lower interest rates – and the potential for more to come – have also made some developers eager to jump back into the market. "In my experience, lower interest rates always generate momentum, making projects more feasible as rates decrease," Sampson said.
But headwinds remain, including a rising number of construction industry insolvencies, pricey construction costs and an ongoing skilled labour shortage. In the most recent monthly consumer price index (CPI) report, new dwelling prices rose 0.4% in August, thanks to price hikes from home builders and fewer discounts and promotional offers in some cities. Adding to the pressure, many developers now face tighter credit conditions as traditional lenders pull back. It's little surprise then that building approvals fell in July, with seasonally adjusted building approvals falling 8.2%, month-over-month, to 15,769, down from 17,076 in June.
"Some developers have been hesitant due to rising material costs," Sampson said.
"Capital cities are definitely the hot spots due to the lag of approvals in the past from local councils," he added. "But we have seen some larger regional centres gain momentum."
At the same time, business lending, which includes construction loans, is trending upward.
The latest Equifax Business Pulse report found that the demand for commercial credit rose 4.7% in August, year-over-year. Westpac reported a 14% year-on-year increase for the first half of 2025. Commonwealth Bank of Australia (CBA) is also doubling down on its business lending division. The major bank grew its business loan book by 9.1% (or $3.7 billion) in the three months leading up to 31 March.
In the case of Prime Capital, which has been around since 1997, the firm launched "business jumbo loans" earlier this year, which Sampson said has been gaining traction ever since. The product offers business loans between $5 million and $25 million.
