Commercial loans are secured by a commercial or residential property and the purpose is to buy, refinance or cash out equity for commercial purposes such as buying another physical commercial property.

Business loan can be unsecured or secured by a commercial or residential property and the purpose can be for business acquisition, purchase, expansion, renovations, fit out or cash flow.

Most commercial and business loans are done on a case-by-case basis as, different lenders have different appetites to what type of deal they are looking for; this appetite varies from banks to banks. One bank may be comfortable to do the deal, while another may reject the deal simply because they don’t like that industry.

Commercial loans

Generally commercial loans which are secured by a commercial security attract a lower loan term of 5-25 years, but it is possible to still obtain a 30 year loan with certain lenders. Interest rate can be more expensive then a residential loan, but not by much.

It is possible to obtain residential rates for a commercial purpose.
There are generally two (2) types of borrowers who would apply for a commercial loan:

1. Businesses owners – Company, solo traders, SMSF (self-managed super funds) or ABN holders who are buying a commercial property such as an office to expand their business or stop paying rent.
2. Investors – This can be an ABN holder, company or private/personal investor, SMSF- Commercial properties attracts a higher rental yield then residential properties and this is where the structure of the commercial loan would make a big difference in the overall return.

Consider as standard security by most lenders.

Business loans

All business loans are assessed on a case by case basis, as every situation and industry are so different.
The standard business loan purposes are:

  • Start/buy a new business- franchise
  • Buy an existing business
  • Cashflow
  • Expansion of existing business
  • Fit out and renovations
  • Pay for invoice and GST
  • Tax debt
  • Acquisition
  • Buy out an existing director or partner
  • Buy a rent roll
  • Fund projects

Business loans are short term loan ranging from 1-5 years. Longer loan terms can be provided if it’s secured against a physical commercial or residential property.

Commercial Finance By Industry
Industries / TypeLender 1Lender 2Lender 3
Advertising Agencies
Asset Management
Auto Dealership, repairs, service and mechanics
Accommodation / Motel
Aged Care and retirement villages
Business service - Accounting, Management, Planning etc..
Business Expansion
Brothel
Clubs / Pubs
Caravan Park
Computer - Repairs and sales
Cleaning service and Cleaning product sales
Drugs - Development, Retail , sales etc
Dental
Electronics - Sales, Repair and development
E-Business - Service
Farm
Food - Whole sales, Retail sales and development
Food and beverage – Bars, Drinks, Bubble tea, café
General Entertainment - Gaming, Snooker, Arcade
Home improvement - Hardware stores, service and builders
Hospitals
Internet service provider
Insurance Broker and service
Investment Broker and services
Jewellery Store or Marker
Long distance carrier
Money centre - Private Banks
Marketing service, Management and development
Muti-Development - Construction of block of units or properties
Muti-Property ( Existing) - Block of units under one title, Townhouses etc...
Movie production, Music production and Photographic Services
Medical clinic and service- (All types )
Management rights
Optometrists and eye care
Pharmacy
Publishing - Private, freelance and corporate
Property Management- real estate, Strata Management
Parking stations- car parks
Office
Rental and leasing services - Car, Furniture’s, goods etc...
Restaurants
Retail shop
Recycling and Population management- Solar power, Wind, Water and Green Business
Rent Roll
Self Manged Super Fund ( SMSF)
Security - Service and sales
Sports - Clubs, retail and service
Storage Facilities
Specialty investments - Gambling Machines, vending Machines, ATM's etc...
Staffing and Outsourcing Services- HR and Training
Scientific development and research
Tobacconist
Textile- Clothing and footwear and accessories
Telecommunication - Resellers, Service, Sales, Repairs, Networking etc..
Taxi Plates
Workshop
Warehouse
Viet Clinics

***The above table is a Basic guide, all commercial deals are approved and dealt with on a case by case basis- Contact us for a private and obligation free chat regarding your personal situation.

Myth busters

There are certain misperceptions and out of date information floating around when it comes to commercial loans, here are the common myth answered;

  • Commercial loans are available to EVERY borrowers NOT just ABN holders/ company/ trust HOWEVER certain lenders may have restriction on borrowers type.
  • Commercial loan is available to full doc and low doc borrowers ( no doc also available, but not as common).
  • Commercial loans are available on ALL transaction even for standard residential properties as it’s up to the commercial credit department to accept the deal as required- however commercial loans is not recommended if not required.
  • The standard Max LVR for Commercial loans is 70%. With some extending this to 80% for certain industries.
  • LMI (insurance) is not available for commercial loans, hence why the Max LVR is 80%.
  • Commercial loans generally speaking are more expensive in terms of rates and fees
  • Certain industry can go to 95% LVR such as medical professionals.
  • Commercial loans provides a lot more flexibility in how credit will accept and look at your overall deal- Even if a residential lender has rejected your deal, a commercial lender may accept it.
  • Construction of Block of four (4) units or town houses is normally done as a commercial loan as it provides a lot more flexibility, but a residential loan is possible for the right purpose for the block of four.