Commercial Property Loan

Understanding Commercial Property Finance

Commercial property finance refers to loans tailored for properties categorized under commercial, industrial, or mixed-use zoning. It covers a wide range of property types, including office spaces, retail establishments, industrial sites, and hospitality venues.

Such properties may include service stations, hotels, clubs, car washes, industrial warehouses, factories, storage units, cafés, corporate offices, retail shops, malls, parking areas, mixed-use developments, and properties with specialized purposes. Financing options include term loans, business credit lines, bridging finance, SMSF loans, low-doc and lease-doc loans, and BBSY commercial loans, provided by major banks, secondary lenders, and specialized financial institutions.

Unlike residential mortgages, commercial loans typically have shorter durations (ranging from 3 to 25 years), higher interest rates, and additional conditions known as covenants that borrowers must meet. Flexibility in structuring allows businesses to tailor loan facilities to their specific financial circumstances.

Due to zoning restrictions and market demand differences, lenders impose borrowing limits based on property type, location, and valuation ratios.

Different Ways to Own a Commercial Property

There are multiple approaches to owning commercial real estate, and seeking professional advice can help determine the best option for your situation.

• Through a company entity, either as part of an existing business or via a newly established firm dedicated to property ownership.
• Within a trust arrangement, either using an existing trust or forming a new one for asset management.
• As an individual owner.
• Most lenders support financing regardless of the ownership structure.

Funding Options for Commercial Real Estate

A variety of lenders in Australia, including banks, non-bank entities, and independent financiers, offer tailored commercial property funding solutions.