A commercial property loan helps you buy or refinance property used for business, such as an office or a warehouse. Before approving it, a lender assesses the business and the property, including any lease. Compared with a home loan, you can expect more documents and a closer look at the property as security.
Business owners near Camp Hill may look at premises in commercial and industrial areas such as Murarrie or Hemmant, or at shopfronts closer to home in Coorparoo and Carina. How you plan to use the property changes how the loan works. That’s the first thing we sort out with you.
What is a commercial property loan?
A commercial property loan is finance for purchasing or refinancing eligible commercial property. That includes premises you will run your own business from, and property you buy as an investment to lease out.
As an illustrative example, a physiotherapist buying a clinic in Coorparoo would be assessed mainly on the practice’s trading history. An investor buying a leased warehouse in Murarrie would be assessed more on the lease and the rental income it produces. Both are commercial property loans, and the lender asks for different information in each case.
What are the stages of a commercial property loan?
Understanding how a commercial property loan works starts with its stages. You clarify the purpose of the loan, and the lender reviews your financial position and the property. Once the loan is approved, it settles and the property transfers to you or your entity.
Lending options depend on the business, the finance purpose, your financial position, the proposed security and lender criteria. Your lender values the property as security and decides how much it will lend against it. Final loan terms come later, in the lender’s offer.
Commercial property is often bought through a company or a trust. Some buyers use a self-managed super fund (SMSF). Which structure you use affects which lenders may suit you. We’d suggest settling it with your accountant before you apply.
How a commercial property loan works for owner-occupiers
If your business will operate from the property, the lender looks closely at the business’s trading history and cash flow. It wants to see that the business can meet the repayments from its own income.
How a commercial property loan works for investors
If you are buying a leased property, the lender reviews the lease information alongside your own finances. Rental income helps support the loan, so lenders pay close attention to the lease terms and the tenant’s position.
How is a commercial property loan different from a home loan?
It mostly comes down to how each loan is assessed, as the table below shows.
| Feature | Home loan | Commercial property loan |
| Main assessment | Personal income and expenses | Business financials or rental income, plus the property |
| Ownership structures | Usually individuals or joint names | Individuals, companies, trusts and SMSFs |
| Documents | Payslips, bank statements and ID | Financial statements, tax returns, BAS and lease information |
| Property check | Residential valuation | Valuation of the commercial property and its income |
Lender criteria vary widely in commercial lending. Comparing options before you apply shows you which lenders may suit your situation.
What does a lender look at on the property itself?
Lenders look at the type of property and how easily it could be leased or sold if needed. A standard office or warehouse is often viewed differently from a specialised building with only one likely use.
Expect the lender to order a valuation of the commercial property. For a leased building, that valuation also reflects its rental income. If the valuation comes in lower than expected, the amount the lender will offer may change. Keeping extra funds available gives you some cover if that happens.
What documents do you need for a commercial property loan?
Requirements may include financial statements, tax returns, BAS, bank statements, lease information, asset and liability details and property documents. Each lender has its own list, and it changes with your situation as an owner-occupier or investor.
Waiting on recent financials from your accountant is a common hold-up. We’d suggest starting that conversation well before you sign a contract, so the application doesn’t stall in assessment.
When a commercial property loan may not suit you
It’s a big decision, and there’s no single right answer. Buying premises can give a business long-term security over its location. It also ties up capital that could otherwise fund stock or growth. Some businesses prefer to lease and keep cash available, and we can talk through both options with you.
SMSF property purchases come with extra rules and costs, so they need professional advice before you proceed. Our financial planning partners can help you understand if this structure fits your situation.
How our commercial loan broker team helps
As a commercial loan broker based in Camp Hill, we help clarify the purpose of the loan and compare lender options. We then prepare the application so it is presented clearly. Our commercial lending in Camp Hill covers businesses across trades, health and medical, hospitality and professional services. Astute Financial Management holds Australian Credit Licence 364253, and our Camp Hill team operates under that licence.
- Understand the purpose. We discuss what you are looking to finance and why.
- Review the position. We look at your financial information, commitments, security and the relevant lending requirements.
- Identify suitable options. We assess appropriate lender options and explain the important differences.
- Prepare and submit. We help with the application, supporting documents and lender communication.
- Manage the process. We follow the application through assessment and keep you informed along the way.
The lender makes the final decision on your loan.
Key takeaways
- A commercial property loan is assessed on business or rental income, plus the property as security.
- Owner-occupiers and investors are assessed differently, so know which you are before you apply.
- The lender values the property, and a lower valuation can change the amount offered.
- Ownership structure affects which lenders may suit you, so settle it with your accountant early.
Frequently asked questions
Can I buy commercial property through my SMSF?
Yes. We can help you explore lending options for buying property through an SMSF, subject to your fund structure, eligibility and lender requirements. SMSF lending also needs professional advice before you proceed.
Can you help refinance an existing commercial property loan?
Yes. We can assist with refinancing eligible commercial property, subject to the borrower, property, security and lender criteria. Refinancing can also be a chance to check the loan still fits the business.
Is a commercial property loan harder to get than a home loan?
Often, yes. Lenders look at the business and the property in more detail, so the application usually needs more documents. Preparing them early helps the application move through assessment.
Do I need a commercial loan broker to get a commercial property loan?
No. You can apply directly with a lender. A commercial loan broker can compare lender options and handle communication with the lender through assessment.
Will you explain any fees before we start?
Yes. We explain any fees or costs that may apply before we start, so you know where you stand before the application goes in. You will also receive our credit guide.
Do you review my commercial loan after settlement?
Yes. We review your finance every 12 months. A review checks the loan still suits the business as it grows or changes.
If you are planning to buy or refinance commercial property, the team at Astute Financial Camp Hill can talk it through with you at our Newman Avenue office or on (07) 3333 5534. You can also contact our team to book a time.
This communication contains general information only and in no way constitutes the provision of professional advice, nor should it be relied on as a substitute for financial, credit, accounting, legal or other professional advice. We have not taken into account your financial situation, investment objectives or particular needs. Before making an investment or financial decision, a person must seek appropriate independent professional advice and also consider whether this information is appropriate to their needs, objectives and circumstances. The author as well as their representatives, agents and employees give no guarantees and make no representations, express or implied, as to the accuracy, currency, completeness or suitability of the information contained in this document. Nor do they accept any liability whatsoever as a result of any information herein being incorrect, incomplete or unsuitable or as a result of a person in any way using or relying on the information herein.
