Commercial property loans, arranged properly

What counts as a commercial property loan?

A commercial property loan is finance where the security is a building or land used for business or investment rather than as somebody’s home. Think offices, retail shops, warehouses, factories, medical suites, childcare centres, service stations, hotels, and buildings that mix shops with apartments. If the property earns income, houses a business or could be developed, a commercial lender will usually treat it as commercial security.

The lending logic differs from a home loan. A home loan lender mostly asks whether you can service the repayments from your wages. A commercial lender also asks whether the building itself is a good asset: where it sits, what it could be used for if the tenant left, how long the leases run and how easily it could be sold. That is why two loans of the same size can get very different answers from different lenders.

Who do commercial property loans suit?

Commercial property finance suits a wide group of people:

• Business owners who want to stop paying rent and buy the premises they trade from.
• Investors buying a tenanted shop, office or industrial unit for income.
• Developers and builders who need to buy or hold a site.
• Self-managed super fund trustees buying business premises inside super.
• Owners of existing commercial property who want to refinance, release equity or fix a loan that no longer suits.

If you are one of these and a lender has already said no, that is not the end of the road. A decline often says more about that lender’s appetite than about your deal.

What do lenders look at on a commercial property?

Lenders weigh up several things together rather than one at a time:

Area	What the lender is asking
The property	Type, location, condition, zoning and how easy it would be to sell
The income	Existing tenants, lease terms, rent reviews, or the borrower’s trading income if owner-occupied
The borrower	Experience, financial position, other debts, credit history and structure
The purpose	Purchase, refinance, equity release, construction or short-term use
The exit	How the loan will be repaid or refinanced at the end of the term

Specialist property types, such as a petrol station, a pub or a childcare centre, are assessed by lenders who understand the trade. A general lender may simply say no to a deal that a specialist would find ordinary.

How does Ownright approach commercial property finance?

Ownright Custom Finance is built around finding solutions. Director Trevor Scott has more than 40 years in finance, and our job is to match the deal to the lender that will actually want it. That includes bank-style lenders for clean deals and private or non-bank lenders where the situation is more complicated, urgent or unusual.

We do not shop your deal around every lender and leave footprints on your credit file. We work out the right fit first, assemble the submission so the strengths lead, and handle the back-and-forth that follows. If a deal needs creative structuring, such as extra security, a staged approach or a short-term loan that is later refinanced, we say so up front.

Want to see where your deal sits? Start a conversation here and tell us what you are trying to do.

How do the different commercial loan types compare?

Situation	Typical direction	Page to read
Buying your own business premises	Owner-occupier structure	Owner-occupier commercial loans
Buying a tenanted building for income	Investment structure	Commercial investment property loans
Replacing a loan that no longer works	Refinance	Commercial loan refinance
Buying inside super	SMSF structure	SMSF commercial property loans
Need funds quickly for a deadline	Short-term or bridging	Short-term commercial loans

What does the cost of buying commercial property include?

The purchase price is only part of it. Buyers commonly budget for transfer duty (stamp duty), which is set by each state or territory revenue office and is usually calculated on the dutiable value, plus legal fees, valuation fees, lender fees and any GST implications. Many commercial sales are either GST-inclusive, GST-free as a going concern, or sold under the margin scheme, and the ATO explains how each works for sellers and buyers. The treatment changes how much cash you need at settlement, so raise it with your accountant and solicitor early. Your state revenue office website, such as Revenue NSW or the State Revenue Office Victoria, is the place to check duty rules for your state.

An illustrative example

Illustrative only, no real client. A small company trades from a rented workshop and finds a similar unit for sale. Their bank likes the business but is cautious about the age of the building and a short remaining lease on one of the other units in the complex. We would look at the property from a specialist’s angle, consider whether a non-bank lender fits better, and present the trading history so the income story is clear. If timing is the issue, a short-term structure could hold the purchase while a longer-term loan is arranged. Whether that is available always depends on the lender and the security.

Common mistakes to avoid

• Signing a contract before knowing which lenders would fund the property type.
• Applying to several lenders at once and letting enquiries pile up.
• Leaving out a lease or rent schedule that would have strengthened the file.
• Assuming a bank decline means every lender will decline.
• Forgetting duty, GST and legal costs when working out the cash needed.
• Not asking what the exit or refinance plan looks like for a short-term loan.

What documents help?

Having these ready usually speeds things up:

• Contract of sale or a description of the property
• Existing lease agreements and rent schedules, if tenanted
• Financial statements and tax returns for the borrower and any guarantors, where relevant
• Business activity statements or accountant’s letter if self-employed
• Details of existing loans and security
• Entity details such as trust deed, company structure or SMSF deed

Missing something? Do not wait. We can often work out alternatives or lender types that need less paperwork.

How long does the process usually take, and what slows it down?

There is no standard timetable, because commercial deals vary so much. A clean purchase of a standard building with a tidy borrower can move along comfortably, while a deal with a complex lease, a company and trust structure or a specialist asset takes longer. The biggest sources of delay are almost always the same: documents arriving late, a valuation that needs a second look, and questions about the borrowing entity that could have been settled at the start.

You can help by gathering paperwork early and telling us about anything unusual before a lender finds it. A short lease on one tenancy, a boundary issue or an old default are all easier to handle when they are raised upfront with an explanation attached.

Should I use a company, a trust or my own name?

This is a question for your accountant and solicitor, not for us, but the answer changes the finance. Lenders usually ask directors or trustees to guarantee a company or trust loan, and each structure has its own paperwork. A property-holding trust that leases to your operating business is common among owner-occupiers, while investors often use whichever structure suits their wider tax and succession planning. We can explain how each structure looks from the lender’s side so that your advisers can weigh it with the full picture.

What happens after settlement?

Settlement is not the end of the relationship with the loan. Commercial loans often include review dates, covenants or conditions about insurance, leases and financial reporting. Knowing what these are before you sign avoids unpleasant surprises. If the loan is short-term or on interim terms, the plan for the next refinance should already be in motion. Part of our role is to keep an eye on that horizon with you, so that the next conversation with a lender happens on your timetable.

Ready to talk through your commercial deal?

Whether it is a first purchase, an investment, a refinance or a deal another lender walked away from, send us the details and we will come back with a straight answer on the options. For background reading, our guide to how commercial property loans work goes through the process step by step. If Ownright can’t find the solution, no one can.