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Commercial loans/ Business loans


Most commercial loans are done on a case by case basis as, different lenders have different appetites to what type of commercial deal they are looking for; this appetites varies from banks to banks. One bank may be comfortable to do the deal , while another may reject the deal as they may already have too many on their books. 


This page is just to provide some basic details, so please feel free to contact us regarding any questions you may have and let us provide you with a basic and structured solution that make sense from the word GO!


Commercial loans Borrowers?


There are generally two (2) types of borrowers who would apply for a commercial loan:


1. Businesses owners - Company, solo traders or ABN holders who are buying an commercial property such as a office to continue, start or expand their business.


2. Investors - This is can be a ABN holder, company or private/personal investor; Commercial properties generally speaking returns a higher rental yield then residential properties and this is where the  structure of the commercial loan would make a big difference in the overall return.


Commercial Finance By Industry



Industries / Type Lender 1 Lender 2 Lender 3
Advertising Agencies Yes Yes No
Asset Managment No Yes Yes
Auto Dealership, repairs, service and mechanics Yes Yes Yes
Accommodation / Motel Yes No Yes
Aged Care and retirement villiages Yes No Maybe
Business service - Accounting, Management, Planning etc.. Yes Yes Yes
Business Expansion Yes Yes Yes
Brothel No No Maybe
Clubs / Pubs Maybe Yes Yes
Caravan Park No No Yes
Computer - Repairs and sales Yes Yes Yes
Cleaning service and Cleaning product sales No Yes No
Drugs - Development, Retail , sales etc Maybe Maybe Yes
Dental Yes Yes Yes
Electronics - Sales, Repair and development  Yes Yes No
E-Business - Service Yes Yes  Yes 
Farm  Maybe  Maybe  Yes 
Food - Whole sales, Retail sales and development  Yes  Yes  Yes 
Funeral parlors  Yes  Yes Yes
General Entertainment - Gaming, Snooker, Arcade  Maybe  No Yes 
Home improvement - Hardware stores, service and builders  Yes  Yes  Yes 
Hospitals  Yes  No No 
Internet service provider  Yes  No Maybe 
Insurance Broker and service Yes  Yes  Yes 
Investment Broker and services  Yes  Yes  Yes 
Jewelery Store or Marker  Yes  No Yes 
Long distance carrier  No  Yes Yes
Money center - Private Banks No  No  No 
Marketing service, Management  and development  Yes  Maybe  Yes 
Muti-Development - Construction of block of units or properties Yes  Yes  Yes 
Muti-Property ( Existing) - Block of units under one title, Townhouses etc...  Yes  Yes  Yes 
Movie production, Music production and Photographic Services  Yes Yes  Maybe 
Medical clinic and service- (All types ) Yes  Yes  Yes 
Management rights  Yes  Yes  Yes 
Optometrists and eye care  Yes  Yes  Yes 
Pharmacy  Yes  Yes  Yes 
Publishing - Private, freelance and corporate  No  No  Yes 
Property Management- real estate, Strata Management  Yes  Yes  Yes 
Parking stations- car parks  Yes  Yes No
Office Yes  Yes  Yes 
Rental and leasing services - Car, Furnitures, goods etc...  No  Maybe  Yes
Restaurants  Yes  Yes  Yes 
Retail shop Yes  Yes  Yes 
Recycling  and Population management- Solar power, Wind, Water and Green Business  Maybe  Maybe  Yes 
Rent Roll  No Yes  Yes 
Self Manged Super Fund ( SMSF)  Yes  Yes  Maybe 
Security - Service and sales Yes  Yes  Yes 
Sports - Clubs, retail and service  No Yes Yes
Storage Facilities  No  No Maybe 
Specialty investments - Gambling Machines, vending Machines, ATM's etc...  No  Maybe  Yes 
Staffing and Outsourcing Services- HR and Training  Yes  Yes  Yes 
Scientific development and research  Maybe  Maybe  Maybe 
Toy and Hobby Stores  No  Maybe  Maybe 
Textile- Clothing and footwear and accessories  Yes Yes  Yes 
Telecommunication - Resellers, Service, Sales, Repairs, Networking etc..  Yes  Maybe  Yes 
Taxi Plates  Yes  Yes  Maybe 
Workshop  Yes  Yes  Yes 
Warehouse  Yes Yes Yes 
Viet Clinincs Yes  Yes  Yes 


 ***The above table is a Basic guild, all commercial deals are approved and dealt with on a case by case basis- Contact us for a private and obligation free chat regarding your personal situation


Myth busters


There are certain mis-perceptions and out of date information  floating around when it comes to commercial loans, here are the common myth answered;

  • Commercial loans are available to EVERY borrowers NOT just ABN holders/ company/ trust  HOWEVER certain lenders may have restriction on borrowers type
  • Commercial loan is available to full doc and low doc borrowers ( no doc also available, but not as common)
  • Commercial loans are available on ALL transaction even for standard residential properties as it's up to the commercial credit department to accept the deal as required- however commercial loans is not recommended if not required.
  • The standard Max LVR for Commercial loans is 70%. Once you go over the 70% LVR mark the lender will charge a very expensive " risk fee " up to 80% LVR.
  • LMI (insurance) is not available for commercial loans, hence why the Max LVR is 80%.
  • Commercial loans generally speaking is more expensive in terms of rates and running cost.
  • Commercial loans provides a lot more flexibility in how credit will accept and look at your overall deal-  Even if a residential lender has rejected your deal, a commercial lender may accept it.
  • Construction of Block of four (4) units or town houses is normally done as a commercial loan as it provides a lot more flexibility, but for this to be done as a residential deal is not out of the question.

Rule of Thumb- Pricing/Interest Rate 


First question investors ask is; " Can this deal be done?" and the second question is " At what rate ? and cost? "

Most Commercial loans comes with a entry/set up cost and it ranges from 0.5%- 2% of the loan amount.


Regarding interest rate, this depends on a number of factors;


1. Security ( if any)

2. Type of Business

3. Experience

4. Loan Amount

5. LVR- Deposit

6. Business Plan

7. Business Strategy and Use of funds

8. Credit History and Financial History

9. Asset and Liabilities

10. Borrower type - Company, Trust, Personal

11. The Lender's Appetite for this sort of deal

12. Type of Rate - Bill rate, Fixed , Variable



Go With The Best


Remember, financing a commercial deal can be complex and time consuming. Don’t trust just anyone . Instead, place your trust in those with true experience in the Australian mortgage market – Shape Home Loans.




** Oct 2011 Commerical Finance Case study ****

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