Childcare operators planning to build or expand their centres are facing new financial pressure, with the cost of non-residential construction rising 3.8% over the 12 months to September 2025, according to the Australian Bureau of Statistics.

While demand for childcare places remains strong across the country, higher material and labour costs mean new projects are becoming more expensive to deliver and harder to finance.

This makes it important for owner-operators to understand what finance options are available and what lenders expect before approving construction loans for childcare centres.

How owner-operators can finance construction

Many operators assume traditional commercial loans are the only pathway, but there are several options worth considering:

- Specialist commercial property loans: These products are designed for sector-specific assets, such as childcare centres. They recognise the unique nature of early learning centres and take into account occupancy rates, government subsidy income streams and the specialised nature of childcare property assets when offering terms and interest rates.

- Equity release: If you already own a centre with strong equity, you may be able to unlock part of that value to fund a new build or extension.

- Government grants and subsidies: Depending on your location and the nature of your project, you may be eligible for early childhood infrastructure funding or state-based support packages. For example, New South Wales’ Building Early Learning Places Program offers not-for-profit centres funding for capital works.

How to improve your chances of securing finance

In this challenging environment, preparation is everything. Lenders scrutinise construction projects carefully when costs are rising and economic uncertainty persists.

You can strengthen your applications by:

1. Preparing detailed cost breakdowns and updated feasibility studies that reflect current market prices, labour conditions and projected enrolment numbers.

2. Securing fixed-price contracts with yourbuilders where possible. This helps reduce the risk of cost overruns and gives lenders more confidence in your budget.

3. Maintaining strong financial records, including profit-and-loss statements, occupancy trends and wage forecasts.

4. Working with a specialist broker like Ligo Finance who understands childcare lending, lender appetite and how to structure applications that highlight the strengths of your business.

If you’re planning to build or expand your centre, Ligo Finance can help you secure the right funding structure. Get in touch to discuss your options.