Your Guide to Commercial Property Loans Available in Australia
With many financing options available, adapted to the particular requirements of various types of properties and borrower profiles, making the correct choice is crucial to your investment. Regardless of whether you want to purchase a key office space, refinance an existing property, or even explore more niche financing, you need to know the distinctions between each loan type. This guide explains the products and how to use commercial property loans to your advantage.
Key Takeaways
Prime Commercial Property Loans are the gold standard for solid financials and consistent cash flow. These loans are best suited for established companies and feature the lowest rates and lowest lender fees. Key requirements typically include a deposit of only 20% plus costs, clean credit history, profitable business with at least two years of financial statements, and enough cash flow to service the loan. Prime loans from major banks and specialized non-bank commercial lenders have terms up to 25 years.
Alt Doc Commercial Property Loans
Alternative Documentation Alt Doc Commercial Property Loans are an option for self-employed people, startups, or businesses with unusual financial records. These loans accommodate those who cannot meet the strict documentation requirements of prime loans by accepting other forms of proof of income and business health. Although their interest rates are higher because of perceived higher lending risk, Alt Doc loans can be flexible with requirements including 6 months of business activity statements or accountant letters. The LVR on these loans typically caps at 75-80%.
Bad Credit Commercial Property Loans
Bad Credit Commercial Property Loans are for people or businesses with poor credit histories. Such loans are provided by specialized lenders in Australia, in which a blemished credit file doesn’t always prevent borrowers from taking out a commercial loan. For bad credit loans, applicants may have to put down a larger deposit of often 25>30% and face higher interest rates. Demonstrating the property’s lease potential, location advantages, and steps to clear past defaults may increase approval chances.
Lease Doc Commercial Property Loans
Lease Doc Commercial Property Loans are for Commercial Properties that a commercial Property Lease through a arms length tennant. Here, the emphasis is on the lease’s income-producing potential rather than other lending liabilities. Approval criteria include a good lease agreement and a good tenant. These loans typically require about a 20% deposit and have shorter loan terms of typically 20 > 25 years.
SMSF Commercial Property Loans
Self-Managed Super Fund – SMSF Commercial Property Loans allow SMSFs to invest in commercial Property. These loans meet certain criteria of traditional commercial loans and must also meet SMSF regulatory requirements. Properties purchased via SMSF loans must be investment properties and not personal use.
Choosing the Right Commercial Property Loan
Consider your business situation, the details of the property, and your ability to service the debt when you choose a commercial property loan. Preparing detailed financial statements, putting down a large deposit, and choosing a property with good leasing potential will boost your loan approval. Lenders want confidence the property can generate enough rental income to service the loan.
Conclusion
Looking into your commercial property loan options is the first step towards achieving your business real estate goals in Australia. Whether you want Prime, Alt Doc, Bad Credit, Lease Doc, or SMSF loans, the right fit is based on your business’s financial picture and the property’s potential.
For personalized advice and a free analysis of your commercial property loan rates in Australia contact Finance Me. Call today for a free assessment from one of our brokers who can help you through the loan application and negotiate terms on your behalf.
Leverage our experience in commercial property loans to find the financing solution that best fits your company and your objectives.
Key Takeaways
- Commercial property loans are used to purchase or refinance commercial real estate for business use (offices, shops, industrial properties).
- Available Loans include Prime, Alt Doc, Bad Credit, Lease Doc, and SMSF Commercial Property Loans to suit various borrower needs and situations.
- Lenders look at a property’s expected income and the borrower’s financials to determine loan eligibility.
- Loan specifics like deposit requirements, interest rates, and fees can vary significantly among loan types.
- Employing a commercial finance broker will enable you to obtain the right loan for your situation.
Prime Commercial Property Loans are the gold standard for solid financials and consistent cash flow. These loans are best suited for established companies and feature the lowest rates and lowest lender fees. Key requirements typically include a deposit of only 20% plus costs, clean credit history, profitable business with at least two years of financial statements, and enough cash flow to service the loan. Prime loans from major banks and specialized non-bank commercial lenders have terms up to 25 years.
Alt Doc Commercial Property Loans
Alternative Documentation Alt Doc Commercial Property Loans are an option for self-employed people, startups, or businesses with unusual financial records. These loans accommodate those who cannot meet the strict documentation requirements of prime loans by accepting other forms of proof of income and business health. Although their interest rates are higher because of perceived higher lending risk, Alt Doc loans can be flexible with requirements including 6 months of business activity statements or accountant letters. The LVR on these loans typically caps at 75-80%.
Bad Credit Commercial Property Loans
Bad Credit Commercial Property Loans are for people or businesses with poor credit histories. Such loans are provided by specialized lenders in Australia, in which a blemished credit file doesn’t always prevent borrowers from taking out a commercial loan. For bad credit loans, applicants may have to put down a larger deposit of often 25>30% and face higher interest rates. Demonstrating the property’s lease potential, location advantages, and steps to clear past defaults may increase approval chances.
Lease Doc Commercial Property Loans
Lease Doc Commercial Property Loans are for Commercial Properties that a commercial Property Lease through a arms length tennant. Here, the emphasis is on the lease’s income-producing potential rather than other lending liabilities. Approval criteria include a good lease agreement and a good tenant. These loans typically require about a 20% deposit and have shorter loan terms of typically 20 > 25 years.
SMSF Commercial Property Loans
Self-Managed Super Fund – SMSF Commercial Property Loans allow SMSFs to invest in commercial Property. These loans meet certain criteria of traditional commercial loans and must also meet SMSF regulatory requirements. Properties purchased via SMSF loans must be investment properties and not personal use.
Choosing the Right Commercial Property Loan
Consider your business situation, the details of the property, and your ability to service the debt when you choose a commercial property loan. Preparing detailed financial statements, putting down a large deposit, and choosing a property with good leasing potential will boost your loan approval. Lenders want confidence the property can generate enough rental income to service the loan.
Conclusion
Looking into your commercial property loan options is the first step towards achieving your business real estate goals in Australia. Whether you want Prime, Alt Doc, Bad Credit, Lease Doc, or SMSF loans, the right fit is based on your business’s financial picture and the property’s potential.
For personalized advice and a free analysis of your commercial property loan rates in Australia contact Finance Me. Call today for a free assessment from one of our brokers who can help you through the loan application and negotiate terms on your behalf.
Leverage our experience in commercial property loans to find the financing solution that best fits your company and your objectives.
