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.

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There are certain mis-perceptions and out of date information  floating around when it comes to commercial loans, here are the common myth answered;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

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