A childcare centre isn't one asset. Lenders read it as two.
There's the property — a specialised, purpose-built building — and there's the business trading inside it. How a deal is secured (freehold going-concern, a leased investment, or leasehold business-only) changes everything: the valuation basis, the indicative LVR, and how hard the lender leans on occupancy, the lease and your track record. We match your deal to the lenders who fund childcare well, and structure it around how a centre actually earns.
How a lender reads a childcare deal.
The single biggest driver of how much you can borrow is what secures the loan. Freehold — where you own the land and building — carries the highest indicative LVR. Leasehold (buying the business only, secured by goodwill) sits lower, because if the operator leaves there's no bricks-and-mortar to fall back on. These bands are typical and illustrative; every lender sets its own.
Occupancy / utilisation
Filled places against licensed capacity — the closer to full and the steadier the waitlist, the stronger the deal reads.
Lease term & WALE
On a leased or investment centre, the remaining lease term (and options) underpins value — childcare commonly trades on long 15–20yr leases.
Operator track record
Experience running centres, compliance history and the covenant behind the lease. First-time operators are assessed more cautiously.
Vacant-possession value
The lender's fallback lens — what the empty building would fetch if it had to be re-leased. Specialised buildings sit below a standard office or shed.
LVR bands are indicative, illustrative and lender-specific — actual leverage depends on the property, the valuation (going-concern vs vacant-possession), occupancy, the lease, the operator and the lender, and is confirmed in writing. Percentages are shown against an registered valuation. Not an offer of credit or a guarantee of approval. Commercial / business-purpose finance, largely outside the National Credit Code.
Two things being financed, assessed differently.
Understanding which one you're buying — and how each is valued — is the whole game in childcare finance.
Freehold — the property
Own the land and the purpose-built centre. Because there's real property behind the loan, this carries the highest indicative LVR — up to around 70% of an registered valuation for a strong, purpose-built going concern.
- Valued on both a going-concern (value-in-use) and a vacant-possession basis
- Lenders lean on the vacant-possession figure for recovery
- Can suit an SMSF commercial hold, leased back at market rent
Leasehold — the going concern
Buy the operating business — enrolments, goodwill, staff and equipment — and take an assignment of the existing lease. Security is the goodwill and a general security deed, so the indicative LVR sits lower: up to around 60% of a business valuation with specialist lenders, and tighter again with the majors.
- No bricks-and-mortar fallback, so more weight on occupancy & covenant
- Shorter terms and a higher indicative rate than freehold
- Operator experience matters most here
Why lenders like childcare — and watch it closely.
A large, government-supported sector gives childcare finance real depth — but conditions vary catchment by catchment, so the numbers only take you so far.
Sources: Australian Government Department of Education — Child Care Subsidy data report, December quarter 2025 (services, children, families, expenditure); Reserve Bank of Australia Cash Rate Target (4.35%, held July 2026). Sector figures describe the market, not any individual centre; a large subsidised sector supports demand but doesn't guarantee any centre's performance.
Four common paths — each secured a little differently.
Freehold going-concern
Buy the land, building and trading business together. Strongest security, so indicative LVR runs up to around 70% of valuation for a well-occupied, purpose-built centre with an experienced operator.
Freehold investment (leased)
Own the property and lease it to an operator on a long commercial lease. Value and serviceability lean on the lease covenant and WALE — childcare commonly trades on 15–20 year initial terms.
Leasehold business-only
Buy the operating business and assign the lease. Secured on goodwill and a general security deed, so indicative LVR is lower — up to around 60% of a business valuation with specialists, tighter (~40–50%) with major banks.
Greenfield & fit-out
Develop a new centre or fit out an existing building to meet the National Quality Standard. Typically staged/progress-drawn and assessed on the "as-if-complete" value and projected occupancy — a more specialised, case-by-case path.
What about the rate?
Indicative commercial childcare rates have recently sat in the region of ~6.15%–8.50% with banks, and wider — roughly 5%–12% — across specialist and non-bank lenders, depending on the security, the covenant and how the deal is packaged.
Rates are indicative ranges only, as at July 2026, and move with the RBA cash rate (held at 4.35%). Commercial pricing is set deal-by-deal on risk, security and covenant and is largely outside the consumer credit code, so a statutory comparison rate generally does not apply; where it does, a comparison rate is true only for the example loan amount and term shown and depends on fees and features. Any figure here is not an offer of credit, a quote, or a guarantee of approval or a particular rate — your options are confirmed in writing.
Childcare centre finance, answered straight.
What deposit or LVR should I expect for a childcare centre?
It depends on what secures the loan. A freehold going-concern (you own the property and business) can reach an indicative LVR of around 70% of valuation, so roughly a 30% deposit. Leasehold business-only deals — secured on goodwill — sit lower, often up to about 60% with specialist lenders and tighter with the majors. These bands are illustrative and lender-specific, and the actual figure is confirmed in writing.
What's the difference between freehold going-concern, freehold investment and leasehold?
Freehold going-concern means you buy the land, building and trading business together. Freehold investment means you own the property and lease it to an operator. Leasehold business-only means you buy just the operating business and take over the lease. Freehold carries real property security and the highest indicative LVR; leasehold relies on goodwill and the covenant, so lenders lend less against it.
How do lenders value a childcare centre?
A valuer typically reports two figures: a going-concern (value-in-use) value based on the trading business, and a vacant-possession value — what the empty, specialised building would fetch if it had to be re-leased. Lenders lean on the vacant-possession figure because that's what they could recover on default, which is why a purpose-built centre's LVR ceiling usually sits below a standard office or warehouse.
How much does occupancy and the lease matter?
A lot. Filled places against licensed capacity, a steady waitlist, and — on a leased or investment centre — a long remaining lease term (WALE) to a solid tenant all strengthen how a lender reads the deal. Childcare property commonly trades on 15–20 year initial leases, which is part of why the sector appeals to lenders and investors.
Can I buy a childcare centre if I'm a first-time operator?
It's possible but assessed more cautiously — lenders weigh operator experience, compliance history and the strength of the covenant behind the lease. Retaining experienced management, partnering with a seasoned operator, or bringing extra security can all help. We'll tell you honestly how your profile is likely to read before you commit.
Can I hold a childcare centre in my SMSF?
Commercial (business real property) is one of the assets an SMSF can hold and lease at market rent, and it can suit a freehold childcare centre held separately from the operating business. It's a specialised structure with its own rules — see our SMSF loans page, and we'll model the finance side with you.
Buying, building or refinancing a centre?
Tell us about the property, the business and how the deal is structured — we'll map the security, compare the lenders that fund childcare, and show you what's realistic before you commit.
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