New Financial Rules for Victorian Builders: Is Your Business "Balance Sheet" Ready?

If you’re a small builder in Victoria, you’re likely more focused on the site than the spreadsheet. However, right now it's time to check in on your business instead of working in it day in day out. The Victorian Government has released the Minimum Financial Requirements (MFR) under the Building Legislation Amendment (Buyer Protections) Act 2025.

It is time to seek professional advice from your accountant how this proposal would impact your business if it becomes law!

Think of the proposal as a mandatory "financial fitness test" that the Victorian governments plans to introduce from 1 July 2026. If your business isn’t in shape by the deadline, you could face restrictions on your license or even lose your registration.

The Key Changes under the proposal : A Quick Breakdown

The government wants to ensure every builder has enough "skin in the game" to finish their projects. Here are the three numbers that now matter most:

• The 20x Revenue Cap: For every $1 you own in Net Tangible Assets (NTA)—things like cash, equipment, or property—you can only turn over $20 in revenue. To run a $2 million business, you must prove you own at least $100,000 in assets.

• The 1:1 Liquidity Rule: You must have at least $1 in "current assets" (cash or things that can be sold quickly) for every $1 in "current liabilities" (bills you owe right now).

• The "Trust" Trap: Historically, many tradespeople have used family trusts to hold assets. By July 1, 2028, trust assets will likely be excluded from your NTA. You may need to move that value into your building company to keep your license.

  
  

The Danger of "Quick Cash" and GSAs

When cash flow gets tight, many small builders turn to "factoring" or high-interest, short-term business loans to bridge the gap.

Here is the catch: These types of loans often come with a General Security Agreement (GSA). A GSA gives the lender a "lock" over all your business assets.

If you have a GSA in place, it becomes incredibly difficult to refinance your debt or move to a better, lower-rate loan later. Other lenders won't want to step in because the first lender already has a claim on everything you own—including the tools and trucks you need to meet your NTA requirements.

The Way Forward: Start Your "Financial Clean-up" Now

While the deadline for small builders is July 1, 2028, you shouldn't wait. Cleaning up a balance sheet and exiting high-cost debt takes time.

1. Review Your Debt: Are you currently using high-rate short-term cash? It’s time to look at Asset Finance or more structured business loans that don't "trap" your business under a GSA.

2. Audit Your Assets: Ensure your trucks, equipment, and cash are held in the right entity so they count toward your NTA.

3. Plan Your Exit: If you are stuck in a factoring loop, work with a partner like Edelweiss Finance to find a path toward more sustainable, long-term funding.

⚠️ URGENT: These rules are designed to weed out businesses that are "hollowed out" by debt. If your business relies on short-term "band-aid" finance, you need a plan to restructure before the BPC starts checking your books.

Disclaimer: We are experts in finance, but we aren't your tax man or legal adviser. These laws are complex and every business structure is unique. You must seek advice from your professional accountant or lawyer to ensure your specific business meets the new Victorian standards.