Last Updated: 27th December, 2022


We are only accepting applications for commercial property loans with a minimum loan size of $500,000, and a minimum deposit of 30%. We apologise for the inconvenience.

Invest in a commercial property that also benefits the community

With a private school commercial loan, you can take advantage of the high yields and stable rental income that often comes with these properties.

There are only one or two lenders that specialise in financing independent schools so how do you get approved?

How much can I borrow?

  • Private school business (freehold going concern): Borrow up to 50% of the freehold going concern value or up to 65% if the property can be used for another purpose, whichever is less. If you have a guarantor, you can borrow up to 100%.
  • Loan term: 20 years.
  • Low doc: Not available with this loan.
  • Non-government schools with more than 400 students and carrying government accreditation.
  • Must have been in operation for at least 5 years.
  • Business plan and cash flow forecasts required for the school.
  • Loans over $5,000,000 are assessed on a case by case basis.

Not sure if your school fits this criteria?

Call us on 1300 889 743 or complete our free assessment form and we can let you know if you qualify for a private school commercial loan.

How can we help?

Because of the relationships that we have within the commercial departments of major lenders and banks, we know which of them will allow you to borrow up to the maximum Loan to Value Ratio (LVR) for your private school purchase.

On top of that, we know which lenders can offer you a competitive price for your loan including a great interest rate.

By properly assessing what you want out of the private school commercial loan, we can choose a lender that is willing to fight for your business.

Did you know there’s more to getting a good deal than low fees and a cheap interest rate?

What can I use the loan for?

Typically, these loans are used to buy a freehold school and the business that comes with it.

However, if you currently own a school and employ principals, teachers and other staff, you can lend against the value of the freehold security, that is, the land and buildings.

This is known as an equity release and you can use these funds for refurbishments or minor renovations required for the school.

This may include building new amenities or replacing carpet, flooring, roofs or verandahs.

You must be in a stable financial position to access this type of funding!

Please complete our free assessment form to find out if you qualify.

What does the bank take as security?

The private school commercial loan is secured by the school and a fixed and floating charge over the operation or business.

How do banks assess private schools?

To qualify for a private school commercial loan, you have to highlight the strengths of the school.

As a minimum, the school should have more than 400 students and must have been operating for the past 5 years.

After that, every application is assessed on its merits.

The commercial lending departments of banks will usually undertake what is known as a SWOT analysis, an acronym for Strengths, Weakness, Opportunities and Threats.

A SWOT analysis for a service station may look something like this:

  • Strengths: The high school has occupancy rates above 80%.
  • Weaknesses: Student-to-teacher ratios are high and the school is struggling to attract new staff.
  • Opportunities: The school is located in an area with planned housing developments. That means more potential enrolments.
  • Threats: A new high school is planned for construction in the next 3-5 years. It will be located less than 10km away.

We’re experts at highlighting the strengths of your application so you can get approved the first time around.

How is the security itself valued?

There’s the school and then there’s the value in the land and the buildings themselves.

The bank will undertake a special valuation to determine the value if the property continues to be used as a school and the value if the site were to be used for another purpose.

For example, the land itself may only have a few standalone buildings being used as classrooms, an attached office block for faculty and administration staff, and an amenities block.

Compared to a school with a purpose-built playground and assembly areas, it will take a lot less work to redevelop the site for another purpose.

The valuer will take into account zoning as well.

If it’s an older site, it may be that the school has changed from mixed use or R1 (Residential) zoning to B3 Commercial or SP2 Infrastructure.

It can still operate as a school but there is also the potential for the school to be knocked down and redeveloped as a block of retail units or even a shopping centre.

This is just an example but, the point is, it represents much less risk to the bank.

If they had to sell the school in the event that you couldn’t make your mortgage repayments, they would have a larger market of buyers including commercial developers.

Will the bank lend to all types of schools?

Yes! Banks don’t discriminate on the type of school you want to purchase.

We can help you finance:

  • K-12 schools.
  • High schools.
  • Schools affiliated with Christian denominations including Anglican, Catholic, Greek Orthodox, Lutheran, Uniting Church, Seventh Day Adventist and Presbyterian.
  • Non-denominational Christian schools.
  • Islamic schools.
  • Jewish schools.
  • Montessori schools.
  • Rudolf Steiner schools.
  • Grammar schools.
  • Indigenous community schools.
  • Schools that specialise in meeting the needs of students with disabilities.
  • Schools that cater for students at severe educational risk due to a range of social/emotional/behavioural and other risk factors.
  • Students with other special needs.

What are the benefits of buying a school?

From a commercial investment perspective, private schools tend to come with stable rental income and long-term tenants:

  • Yields are quite strong and students remain at the same school for an average of 7 years.
  • Education providers essentially receive cash in advance via upfront term fees.
  • There is a significant opportunity for repeat business due to the community nature of private education.

What should you consider when choosing an independent school?

Perhaps the biggest red flag to identify when doing your due diligence is the reputation of the school.

Reputational risk is a huge factor that can make or break a school and quickly see enrolments dwindle.

You should also consider the following:

  • How well are staff paid and are they willing to stay on for the long-term?
  • What is the condition of the premises and, if work is needed, is it major or minor?
  • How big are the class sizes and is there a good teacher-to-student ratio (20-24 students per teacher is a standard benchmark)?
  • Are teachers experienced and is there a reputable principal in place to manage the school?
  • Consider zoning changes for the area and whether planned infrastructure projects or residential developments will help to attract more students.

How much does a private school cost?

Like other types of commercial properties, the purchase price can vary depending on location.

There can be a significant premium attached for schools located in affluent inner city suburbs.

These properties are tightly-held and they’re quickly snapped up by investors if and when they’re advertised.

Why do parents choose independent schools?

According to a survey by the Independent Schools Australia (ISA) (formerly known as the Independent Schools Council of Australia), the main driver of choosing a private school over public is the desire of parents to match the school with the individual needs of the child and the values of the family.

This may be due to religious reasons but parents also consider academic outcomes, the quality of the teaching, the facilities, technology and equipment, the content of the curriculum, and opportunities for extracurricular activities.

Are there grants available?

Private schools are funded by a combination of parental contribution and Australian Government and state and territory government funding.

While the majority of funding comes from parents and other private sources, there are grants available through several state governments that allow schools to subsidise the interest on a commercial loan.

The grant only applies to eligible capital costs including:

  • The purchase of land.
  • Construction or renovations, extensions and repair work of existing buildings.
  • The installation of essential services and other refurbishments.

There have been significant changes made to the funding of non-government schools as a result of the ‘Gonski’ review of School Funding (2010) and subsequent amendments to the Australian Education Act 2013.

The grants your school is eligible for will vary from state to state so it’s best to check with your relevant association for details on government funding:

Ask us about a private school commercial loan!

Call 1300 889 743 or complete our online enquiry form to find out if you qualify for a private school commercial loan.