The short version
- Commercial property loans fund offices, shops, warehouses and factories.
- Expect a bigger deposit, often 30%, and shorter terms than a home loan.
- Rates and terms depend on the property, the lease and your business.
How commercial property loans differ from home loans
Lenders usually lend up to about 60% to 70% of a commercial property's value, so you'll need a bigger deposit than for a home. Terms are often shorter, rates higher and many loans are reviewed every few years.
Lenders look at the property's rental income and lease terms as well as your business's finances.
Pros
- Own your premises instead of paying rent.
- Build equity in a business asset.
- Rental income from tenants can help repay it.
Cons
- Larger deposits and stricter lending than home loans.
- Shorter terms and loan reviews, which can mean higher repayments.
- Empty premises can leave you paying the loan with no rent coming in.
What to compare
Business loans don't have to show a comparison rate, so add up the costs yourself: the interest rate, any establishment and ongoing fees, and what it costs to repay early.
Business lending isn't covered by the responsible lending rules that apply to personal loans and home loans, so a lender won't necessarily check the loan suits you. Work out what you can afford before you apply.
What you'll need to apply
Lenders usually ask for:
- Your ABN, and how long the business has been trading. Many lenders want at least one to two years.
- Business financial statements and tax returns, or recent bank statements and BAS for smaller loans.
- Details of any property or asset offered as security.
- A personal guarantee from the directors or owners, which makes you personally liable if the business can't repay.
Alternatives
- Leasing your premises, which keeps your capital free.
- A self managed super fund, which can buy business premises under strict rules. Get advice first.
- A secured business loan against other property.