Commercial finance can support the purchase, refinance or development of commercial property and other eligible business activities.
Commercial lending differs from standard home lending. The lender may assess the property, the business, the loan purpose, the borrower's experience and the strength of the proposed transaction.
An experienced commercial finance broker can help present the application, identify potential lender options and explain the proposed structure, security and conditions.
What can commercial finance be used for?
Depending on the lender and transaction, commercial finance may be available for:
Not every lender finances every property type, industry or transaction.
- Owner-occupied business premises
- Offices, shops and warehouses
- Industrial and mixed-use property
- Commercial investment property
- Medical, professional or specialist premises
- Property development and construction
- Refinancing existing commercial debt
- Business acquisition or expansion
- Working capital and cash-flow requirements
- Equity release for an eligible business purpose
Owner-occupied commercial property
A business may purchase premises from which it operates rather than continuing to lease.
The lender may assess:
Purchasing premises can provide greater control over occupancy, but it can also concentrate capital and expose the business to property and lending risks.
- The financial performance of the business
- Its ability to meet repayments
- The property's value and marketability
- The borrower's contribution
- Lease arrangements and occupancy
- The industry and management experience
- The proposed loan term and repayment structure
Commercial investment property
For leased commercial property, lenders may consider:
A property with a short lease, specialised purpose or limited resale market may attract more conservative lending requirements.
- The remaining lease term
- The tenant profile
- Rental income
- Vacancy risk
- Property location and condition
- Specialised use
- Outgoings and incentives
- Market value
Commercial loan structures and pricing
Commercial lending may involve:
Rates and terms are frequently determined by the overall risk and strength of the transaction rather than a single publicly advertised product.
- Variable or fixed pricing
- Principal-and-interest or interest-only repayments
- Shorter contractual loan terms
- Periodic reviews
- Establishment and valuation fees
- Property and business security
- Director or personal guarantees
- Financial reporting requirements
- Conditions before and after settlement
Consumer and business lending are not identical
The National Credit Act and National Credit Code regulate consumer credit. Business-purpose lending can be treated differently depending on the borrower, purpose and circumstances.
A transaction should not be described as business lending merely to avoid consumer credit protections. The actual purpose and circumstances matter.
Present your commercial finance application clearly
Commercial finance applications often benefit from clear financial information, a concise explanation of the transaction and an appropriate lender strategy.
Discuss your commercial finance needs
Speak with an experienced broker about your circumstances, available options and the next steps.
FAQs
How much deposit is required for commercial property?
Requirements vary substantially according to the property, borrower, tenancy, loan purpose and lender.
Can a new business obtain commercial finance?
Potentially, but a lender may require a stronger contribution, additional security, industry experience or detailed forecasts.
Are commercial loan terms shorter than home loans?
They often can be. Some facilities have shorter contractual terms or periodic review requirements, even where repayments are calculated over a longer period.
Will I need to provide financial statements?
Often yes. Requirements may include financial statements, tax returns, bank statements, lease documents, forecasts and information about the business owners.