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The first quarter of 2025 has seen strong demand for commercial lending from the construction industry, according to data from business loan marketplace platform, Valiant Finance.
Through the quarter, construction was the top industry for commercial loans and the top industry for the number of inquiries received.
In a discussion with Broker Daily, Valiant CEO Alex Molloy said brokers and non-bank lenders have been instrumental in this boost in construction sector lending activity.
This much-needed relief comes off the back of tightened lending from traditional lenders and stricter regulation from government, said Molloy.
“What we’re really seeing is a double whammy of an industry struggling with increased costs and increased barriers to access credit. The result is many small and mid-sized builders turning to brokers like Valiant and non-bank lenders for support,” said Molloy.
Increased attention from government could help boost activity even further. Molloy noted that off the back of the instant asset write-off policy and vehicle and equipment loan activity increased.
“Just under one in five requests have been for construction assets and equipment were under $20,000. While Labor has recently pledged to reinstate it if re-elected there was definitely a push to finalise purchases before the incentive was supposed to end,” said Molloy.
More support needed
The construction industry has seen steady growth since the low activity through the pandemic.
The Australian Bureau of Statistics’ latest construction data for the December quarter of 2024 saw total construction work done reach a total value of nearly $74 billion.
Engineering construction reached a total value of $35.6 billion. This is up from $34.1 billion in December 2023, $29.1 billion in 2022, $27.3 billion in 2021, and lows of $25.5 billion in 2020.
Despite this, while both the budget and the budget in reply addressed some measures to support the industry, more is needed to reach targets, said Molloy.
“We’re seeing what you could call a ‘two-speed’ construction economy: public projects are moving, but private developers are still stuck facing high borrowing costs, inflated material prices, and a regulatory environment that makes it tough to break ground,” Molloy said.
“The budget didn’t do much to tackle those deeper structural issues. Measures aimed at buoying the sector are fairly limited, and without action on key cost drivers, private construction is unlikely to rebound in a meaningful way.”
Addressing access to capital difficulties is what he believes will make a meaningful difference. This is where brokers play a vital role in supporting growth in the industry.
“[Brokers] are very important, especially for SME builders and sole traders. These businesses are already disadvantaged by their smaller scale, and they’re operating in an industry that’s under increasing pressure. Major banks are tightening their risk appetites, and construction is one of the sectors bearing the brunt of that,” Molloy said.
“That’s where brokers come in. We’re able to step in and help these businesses navigate a complex lending environment, opening up access to a wide range of strong non-bank and alternative finance providers who are still active in the sector.”
[Related: Labor announces extension for instant asset write-off measure]
