Childcare has quietly become one of the most closely watched corners of Australian commercial lending. Demand for places is strong and getting stronger, underpinned by government policy that pays a large share of families’ fees. Population growth corridors (and Greater Geelong has several of the busiest in Victoria) cannot build centres fast enough. For operators, educators ready to buy their first service, and investors weighing a purpose-built freehold, the question is rarely whether the sector has a future. It is how to finance the purchase properly.
Childcare centre finance sits in a specialist lane of business and commercial lending. The difference between a well-structured facility and a poorly-structured one can be measured in tens of thousands of dollars and years of flexibility. This guide explains how lenders look at childcare centres in 2026, what the recent subsidy changes mean for the sector, and how buyers across Geelong, the Bellarine Peninsula, Melbourne and the rest of Australia can put their best case forward.
On 5 January 2026, the Federal Government’s 3-Day Guarantee came into effect, replacing the old Child Care Subsidy activity test. Under the change, families who meet the CCS eligibility rules are entitled to at least 72 hours of subsidised care per fortnight (around three days a week) regardless of how much they work, study or volunteer. Families caring for First Nations children, and families with more than 48 hours a fortnight of recognised participation, can access up to 100 hours. Eligibility conditions and income limits still apply, so operators and families should confirm their position with Services Australia or the Department of Education.
For the sector, the direction of travel is clear: more subsidised hours means more demand for places, particularly in growth suburbs where waitlists were already long. Policy support of this kind is one reason lenders have historically viewed quality childcare centres as a resilient asset class: fees are substantially government-backed, demand is demographic rather than discretionary, and well-run centres in the right catchments hold their value. That does not make every centre a good purchase, and lenders are careful to separate strong services from struggling ones, but it does mean sensible proposals get a genuine hearing.
is the minimum subsidised care the 3-Day Guarantee provides to CCS-eligible families from 5 January 2026: replacing the activity test and strengthening underlying demand for childcare places nationwide.
The single biggest driver of how your loan will be structured is what, exactly, you are purchasing. A childcare transaction usually takes one of three shapes. A freehold purchase means buying the property itself: either as an investor leasing it to an operator, or as an owner-occupier running your own service from it. A leasehold or going-concern purchase means buying the business (the licence, the enrolments, the staff, the goodwill) while renting the premises from a landlord. And a freehold going concern means buying both together, which generally gives lenders the most security and you the most control.
Lenders treat these very differently. Bricks and mortar can be valued and resold; goodwill and enrolments are worth a great deal while the service runs well and much less if it does not. That is why industry sources commonly cite maximum LVRs of around 70% for purpose-built freehold centres (with some lenders going higher for centres in converted residential-style premises or strong metropolitan locations) while leasehold going-concern purchases are often capped somewhere in the 40-60% range, meaning a substantially larger deposit. Loan terms on business-only purchases also tend to be shorter than standard commercial property terms. These figures move with lender appetite and the individual deal, so treat them as orientation, not gospel, and confirm current policy through your broker before you commit. Our commercial property loans guide covers the freehold side in more depth, and our business acquisition loans guide covers buying an operating business.
Most childcare transactions draw on one or more of the following structures. Larger projects (such as developing a new centre from the ground up) move into development finance territory, which is its own discipline.
| Structure | How It Works | Often Best Suited To |
|---|---|---|
| Commercial property loan | Secured against the freehold. LVR depends on whether the centre is purpose-built, the location, and whether you operate it or lease it out. | Investors buying tenanted centres, and operators buying their premises. |
| Business / going-concern loan | Funds the purchase of the operating business (licence, enrolments and goodwill) usually at lower LVRs and shorter terms, sometimes supported by property security you already own. | Experienced educators and operators buying a leasehold service. |
| Equipment & asset finance | Funds fit-outs, playgrounds, commercial kitchens, furniture and centre buses separately, preserving your core loan and working capital. | Refurbishments, expansions and new-room fit-outs. |
| Working capital facilities | Overdrafts and cash-flow lending smooth the gap between wages, which are weekly, and subsidy payments and fee cycles. | Growing services managing payroll-heavy cash flow. |
| SMSF & trust structures | Some investors hold childcare freeholds in a self-managed super fund or trust; strict borrowing rules apply and specialist advice is essential. | Long-term investors with the right structures and advice in place. |
For the moving parts around the edges of the main loan, see our guides to equipment finance for Australian businesses, cash flow and working capital finance, and SMSF property investment. If your plans involve buying land and building a brand-new centre, our development finance guide is the better starting point.
Childcare is a licensed, regulated industry, and lenders assess applications accordingly. Alongside the usual financial statements, expect scrutiny of the centre’s occupancy (industry sources commonly cite lenders wanting sustained occupancy around the 80% mark or better) and its scale, with many lenders preferring services of roughly 25 licensed places or more. The income cover matters too: a common benchmark is that the centre’s earnings should cover the proposed interest costs about twice over, and lenders watch the staff-cost ratio closely, since wages are the dominant expense in every childcare business. Your own experience counts (several years in the industry, or a strong management team, materially strengthens an application), as do the centre’s regulatory standing and ratings under the National Quality Framework. These benchmarks differ between lenders and change over time, so confirm the current requirements with your broker rather than relying on any single published figure.
Preparation wins these deals. Three years of financial statements, current enrolment and occupancy reports, staff rosters and award compliance, the service approval and assessment-and-rating history, and a realistic budget for the first year of ownership: buyers who arrive with that pack assembled consistently get better outcomes than buyers who send documents through in dribs and drabs. It is the same discipline we recommend for any small business loan, applied to a sector where the regulator’s paperwork is part of the credit file.
An experienced centre director from Armstrong Creek approached us about buying the leasehold of the service she had managed for several years, after the owners decided to retire. She knew the business inside out (enrolments, staffing, the works), but the going-concern purchase meant a lower LVR than she expected, and the first lender she had spoken to directly wanted more deposit than she had. We worked through her position and found a combination that fitted: a business loan for the going concern supported by equity in her Grovedale home, with the centre’s kitchen upgrade funded separately through equipment finance rather than baked into the main facility. Because she came with years of hands-on management history and a centre running strong occupancy in a growth corridor, the application presented well, and she went from manager to owner of the service her own community relies on.
Few regions illustrate the childcare story better than Greater Geelong. Armstrong Creek, Lara, Charlemont and Mount Duneed are among Victoria’s fastest-growing family suburbs, and new estates fill with young households faster than services can open. Across the Bellarine Peninsula (Ocean Grove, Drysdale, Leopold) and along the Surf Coast at Torquay and Armstrong Creek’s coastal fringe, established centres carry long waitlists. The same pattern repeats through Melbourne’s west in Werribee, Tarneit and Laverton, and in regional centres like Ballarat. For operators and investors, catchment demographics like these are exactly what lenders want to see behind an occupancy forecast.
While our home base is Geelong and the Bellarine, we arrange childcare and business finance for clients across Melbourne, regional Victoria and Australia-wide: the sector knowledge travels, and most of the work happens over the phone and email anyway. We do the same for allied health, hospitality, trades and other sector-specific lending, from medical practices to franchises.
Order your own review of the centre’s occupancy history and CCS compliance before you go unconditional, not after. Valuations on going-concern purchases can come in below the contract price if enrolments have softened or the licence conditions have changed, and a shortfall discovered late in the process usually means finding extra deposit at the worst possible moment. A finance clause drafted with realistic timeframes for a specialist valuation is your friend in this sector.
It depends on what you are buying. Industry sources commonly cite lending of up to around 70% of the value for purpose-built freehold centres (meaning a deposit of roughly 30% plus costs) while leasehold going-concern purchases are often financed at lower ratios, around 40-60%, requiring a larger contribution. Existing property equity can sometimes be used to bridge the gap. Policies vary between lenders and change over time, so confirm current requirements for your specific transaction with your broker.
From 5 January 2026, the 3-Day Guarantee replaced the Child Care Subsidy activity test. Eligible families now receive at least 72 hours of subsidised care per fortnight (about three days a week) with up to 100 hours for families caring for First Nations children or with higher recognised participation. For operators, it strengthens underlying demand for places. Eligibility rules and income limits apply, so confirm details with Services Australia or the Department of Education.
Yes, this is a leasehold or going-concern purchase, and it is common in the sector. Because the security is the business rather than bricks and mortar, lenders typically advance a smaller share of the price over shorter terms, and they place real weight on your industry experience, the centre’s occupancy and the length and terms of the lease. Supporting the loan with equity in property you already own can improve both the amount and the pricing.
Often, yes. Playground equipment, commercial kitchens, furniture, technology and centre vehicles can frequently be funded through equipment and asset finance, spreading the cost over the life of the assets and keeping your main facility focused on the property or business purchase. The right mix depends on your cash flow and tax position, so structure it with your broker and accountant together.
We’ll assess your position, compare freehold, going-concern and equipment finance structures across our lender panel, and package your application the way childcare lenders want to see it.
With years of experience in mortgage broking and finance, Melanie helps business owners, operators and investors across Geelong, the Bellarine, the Surf Coast, Melbourne and regional Victoria structure commercial, business and equipment lending. Contact our team on 03 9020 2699.
