Land loans for business: financing a site before anything is built on it

Land is the one kind of property a lender can’t lease to a tenant, and one that may sit on the market for months if it ever has to be sold. That’s the short version of why land loans are priced and sized differently from loans against a house or a shopfront. It doesn’t make land hard to finance, but it does mean the right lender, and the right expectations, matter more than usual.

This page covers two situations: buying land for a business purpose, and using land you already own to fund your business.

What counts as a land loan for business?

Most land loans for business fall into one of these patterns:

• Buying a site for your own operations. A transport operator buying a block for a depot, a manufacturer buying an industrial lot to build on later, a farmer adding a neighbouring paddock.
• Buying a development site. Land bought to subdivide or build on, held while plans and approvals are prepared. Once construction starts, the loan usually becomes construction and development finance.
• Releasing equity from land you own. A debt-free block used as security for working capital, a tax bill or equipment. Our situation page on business loans against vacant land covers that in more depth.
• Settling a land purchase on time. A short-term loan or caveat loan to complete a land settlement while longer-term funding is arranged.

Not all land is equal to a lender

The single biggest factor is what kind of land it is. Roughly, from easiest to hardest to finance:

Type of land	Typical lender attitude
Serviced residential or industrial lot in a growth corridor	Plenty of buyers, clear value, easiest to fund
Commercial or mixed-use site in a town centre	Fundable, valued on what can be built there
Development site with an approved DA	Fundable, with value supported by the approval
Rural residential acreage	Fundable with fewer lenders, smaller loan against value
Farmland	Specialist rural lenders and banks, valued on productive capacity
Remote, unserviced or flood-affected land	Few lenders, very conservative sizing or a decline

Services make a real difference. A lot with water, sewer, power and a sealed road frontage is worth more, and sells faster, than one that needs those connections built. Lenders know that, and size their loans accordingly.

How much can you borrow against land?

Every lender applies a ceiling on loan-to-value ratio (LVR) by security type, and bare land gets a tighter ceiling than a home or a tenanted commercial building. Non-bank and private lenders will often go further than a bank on land, at a higher cost and usually on a shorter term.

Two practical points:

1. Valuations are on today’s zoning. If the land is rural today and you expect it to be rezoned residential, the valuer will usually value it as rural. Future upside helps your business case but rarely your borrowing power.
2. Bank loans need servicing. A bank will want to see that your business income can cover repayments, because the land itself produces nothing. Private lenders lean more on the land and your exit, which suits short holds and owners whose financials are lumpy.

Run the numbers with our LVR calculator before you talk to a lender, so you know roughly how much of the price you’ll need to bring.

Holding land and need to free up cash from it? Run it past us for a straight answer on what’s achievable.

Victoria’s land taxes have changed the maths on idle sites

If the land is in Victoria, two taxes now deserve a line in your feasibility:

• Windfall gains tax. Since 1 July 2023, when a government rezoning lifts a property’s taxable value by more than $100,000, the owner can face a windfall gains tax. The State Revenue Office allows payment to be deferred in some cases, but deferred amounts accrue interest and fall due on a sale or after 30 years.
• Vacant residential land tax on undeveloped land. From 1 January 2026, the tax extends to residential-zoned land in metropolitan Melbourne that has stayed undeveloped for five years or more. Land banking a residential block in Melbourne now has a running cost it didn’t used to have.

In every state, land held for business or investment generally attracts land tax once the total value of your landholdings passes the state threshold. Our guide to land tax and business property explains how that works.

What lenders ask for

• Contract of sale or current title search, and any planning approvals
• Zoning and overlays, including flood, bushfire or heritage controls
• Your purpose for the land and, for development sites, a timeline and feasibility
• Your repayment source, whether that’s trading income, a sale, a construction refinance or another asset
• ID, ABN or ACN details, and business bank statements or financials depending on the lender

Costs to expect

Beyond interest, budget for an establishment fee, a valuation (land valuations can take longer in regional areas), the lender’s legal costs, and stamp duty on any purchase. If you’re borrowing short-term from a private lender, ask whether interest is paid monthly or prepaid from the loan, since prepaid interest reduces the cash you actually receive. Compare offers on the total dollars payable over your expected hold.

Pros and cons of financing land

Pros: you can secure a site when it becomes available rather than when you’ve saved the full price; debt-free land you already own can be powerful security; a private lender can fund land that a bank won’t.

Cons: larger contribution needed, few lenders for unusual land, and holding costs that run every month whether or not the site is being used.

Alternatives worth considering

• Option or delayed settlement. Negotiating a longer settlement or a call option can buy time without borrowing yet.
• Borrow against other property. Equity in your home or a commercial building may support a better loan than the land alone. See using home equity for a business loan.
• Buy land and building together. If you’ll build premises soon, a commercial property loan or construction loan may be more efficient than a separate land loan.

Got land, or your eye on some?

Land deals tend to come with deadlines: a settlement date, an auction, a vendor who won’t wait for a bank’s credit team. We look at land-secured scenarios often, including blocks and rural holdings that standard lenders shy away from.

It’s roughly a one-minute form, and lodging it triggers no credit enquiry of any kind. Nothing gets distributed to a panel of lenders, and a property lending specialist reads it before phoning you. Tell us the land’s location, zoning and intended use as precisely as you can; accurate detail is how we get the recommendation right at the outset.

Find out what your land could support →