Commercial property loans
Finance to buy, invest in or refinance commercial property. We compare banks, non-banks and private lenders and structure the loan around the property, the lease and your income. Then we present it the way a lender's credit team will assess it.
Common uses
Buying your premises
Own the building your business trades from instead of paying rent. Lenders look at the business's financials as well as the property.
Commercial investment
Retail, office, industrial, medical and mixed use property. These are assessed mainly on the lease, the tenant and the rent.
Refinancing
Move an existing commercial loan before a review or expiry to better terms or to a lender whose policy suits the property.
Equity release
Access equity in commercial property to fund your next purchase or your business.
How a credit team reads a commercial deal
Commercial loans aren't assessed like home loans. Every lender weighs the property, the income and the borrower differently and credit managers have discretion. These are the questions they work through.
The property and its valuation
Some lenders lend against the valuer's figure and not the purchase price. A commercial valuation also looks at how easily the property could be leased again or sold. Specialised assets like childcare centres, service stations and hotels usually attract a lower maximum loan to value ratio (LVR). So do smaller and regional properties.
The lease and the tenant
For an investment property the lease is the income. Credit looks at how long is left on the lease, how strong the tenant is, the rent reviews, the outgoings and any vacancy. Where there are several tenants this is measured as the weighted average lease expiry (WALE).
Serviceability
Lenders test whether the net rent covers the repayments at a buffered rate with room to spare. If you occupy the property they look at your business's earnings instead. Many lenders measure this as an interest cover ratio. Costs added back to profit like depreciation, interest and unusual expenses need paperwork behind them because lenders won't just assume them. Some loans let you prepay or capitalise the interest, so there are no monthly repayments during the term.
Leasing to your own business
If your business leases the property from your own trust or SMSF the lease isn't independent income. Lenders look through it to the business's financials. The rent should be at market rate and properly documented. For an SMSF this is a requirement under super law.
The borrower and the structure
Companies, trusts and SMSFs all commonly borrow for commercial property. Credit will ask for the trust deed or company documents and check that the trustee has the power to borrow. Most lenders will also want guarantees from the directors.
Your contribution and costs
Commercial purchases come with stamp duty and usually GST on the price unless the property is sold as a going concern. Lenders want to see where the deposit and costs are coming from. GST needs to be funded until you claim it back so have your accountant confirm how it applies.
Four steps, one point of contact
Tell us the plan
What you are trying to do and the approximate amount.
Get a straight answer
Whether it is fundable and which lenders suit it.
Compare the options
Rates, structure, fees and conditions side by side.
Through to settlement
Application prepared, submitted and managed.
Why commercial deals get declined and what to fix first
From the credit side most declines come down to a handful of issues that could have been fixed before the application went in.
- The valuation comes in under the price
The LVR goes up and the loan may need to come down. Allow a buffer in your contribution and check comparable sales before you commit.
- The financials are out of date
Lenders usually want the last two years of financials plus current management accounts. Lodging any overdue returns before you apply avoids a stalled assessment.
- Tax debt hasn't been dealt with
An ATO debt doesn't automatically rule you out. Credit will want to see it on a payment plan or cleared as part of the refinance. ATO debt refinancing →
- The lease is short or the property is partly vacant
When there's little time left on a lease a lender will advance less. Renewing or extending the lease before settlement can change the outcome.
- The application went to the wrong lender
Every lender has a different appetite for property types, locations and loan sizes. A decline from one isn't a decline from all. But each application can leave an enquiry on your credit file so matching the deal to the right lender first matters.
How much deposit do I need for a commercial property?
Most commercial lenders lend up to about 70% of the property's value, so plan on a deposit of around 30%. Some lend up to 80% for strong borrowers and well-located property, which brings the deposit down to 20%. Specialised assets like childcare centres, service stations and hotels often need a bigger deposit. If you own other property, its equity can sometimes stand in for part of the deposit. Allow for stamp duty, any GST and valuation and legal costs on top. Commercial loan repayments calculator →
Can I buy commercial property through my company, trust or SMSF?
Yes. All three are common borrowers. An SMSF borrows through a limited recourse borrowing arrangement and can lease business real property to your own business at market rent. Your accountant or financial adviser should confirm the right structure for you. SMSF loans →
Can I use my home as extra security?
Yes. Some borrowers offer their home or another property as extra security to reduce how much cash they need to put in. It does put that property at risk if the loan isn't repaid so it should be a considered decision.
Are low doc commercial loans available?
Yes. Some lenders will assess your income using other evidence like BAS statements, business bank statements or a letter from your accountant. Expect a lower maximum LVR and a higher rate than a full doc loan. Low doc loans →
How long does a commercial loan take?
It varies by lender and how complex the deal is. As a guide, a straightforward purchase or refinance usually takes 4 to 8 weeks from application to settlement. Complex deals can take longer, while private lenders can often settle within a week or two. The valuation is often the longest step. Having two years of financials, the lease details and access for the valuer ready will shorten it.
Are commercial loans reviewed each year?
Many bank commercial facilities are written for a set term and reviewed regularly, often every year. Some come with conditions on LVR or interest cover. It's worth knowing what gets reviewed and when before you sign.
What is the difference between a commercial property loan and a business loan?
A commercial property loan is secured by the property. A business loan funds the business itself, such as working capital or buying another business, and it may be secured or unsecured. Business loans →
Tell us what you need.
No documents needed to start. Call (02) 7822 0255 or 0481 877 727, or answer a few quick questions.