Guide to Commercial Property investment/Business Loan
A Simple Guide to Commercial Property Loans
Buying commercial property can help your business to save rental cost, build own equity or generate investment income. Understanding how commercial finance works can help you make informed decisions whether what you can purchase and secure the right loan.
1. What Is a Commercial Property Loan?
A commercial property loan is used to buy, refinance or develop property for business or investment purposes, such as offices, shops, warehouses or industrial units. The property usually acts as security for the loan.
2. How Does Commercial Lending Differ?
- Deposit requirements: Many lenders require a deposit of around 30%, although requirements vary.
- Loan terms: Commercial loans may have shorter terms or balloon payments that require careful planning.
- Interest rates: Rates vary depending on the lender, property type and your financial position therefore the rate is driven by risk factors and can vary.
- Lender assessment: Your business financials, cash flow, credit history and the property's value all influence approval.
3. Lenders typically assess:
- Business and Personal income and financial statements
- Cash flow and ability to meet repayments
- Credit history and existing debts
- Rental income and lease agreements, where applicable
4. Buying for Your Business or as an Investment?
You may purchase a property to operate your business from or lease it to tenants. Each option has different financial considerations.
- We can access to lenders that offers lease doc, full doc and low doc options if your income documentations are not up to date yet.
If you’re considering purchasing through an SMSF, seek specialist financial and tax advice.
With access to over 40 banks and non-bank lenders, including specialist commercial lenders, we can help you compare options, negotiate the rate and fees with lenders so to find the right finance solution that meets your business and personal goals.