Business finance
Commercial property finance
Commercial property finance is lending secured against commercial premises: a warehouse, a workshop, a retail space, an office or industrial land. It is used to buy premises to trade from, to buy an investment property, or to refinance something already held.
It is a slower and more document-heavy process than most other business finance, because the property has to be valued and the security properly established. Expect it to take longer than an equipment or working capital facility.
What it is
A loan secured by a registered mortgage over commercial property. Commercial lending is assessed differently from residential lending, and the fact that you have a home loan tells you very little about how this will go.
Where you are buying premises to trade from, lenders will often consider the business trading in them as part of the picture, since the business is generally the source of repayment.
How it usually works
The lender will require a valuation of the property, and that valuation rather than the purchase price commonly drives what is available. Legal work to establish the security adds time, and settlement timetables need to allow for it.
Owner-occupied and investment purchases are assessed differently, as are different property types. Specialised premises with a narrow resale market are generally treated more conservatively than a standard industrial unit.
What lenders look at
Both the property and the business behind it are assessed, and the balance between them depends on whether you will occupy the premises.
- The property: type, location, condition and how readily it would resell
- Whether you will occupy it or lease it out
- Lease terms and tenant quality, where it is an investment
- Trading history and financial position of the business
- Existing commitments and other security held
- Credit history of the business and its directors
When it tends to suit
- Buying the premises you currently lease and trade from
- Moving to a site that fits the business you now have
- Refinancing a commercial property already held
- Buying an investment property through the business
- Releasing equity held in commercial premises for business use
Common questions
How is this different from a home loan?
Commercial lending is assessed on different criteria from residential lending, with the property type, its resale market and the business behind it all weighing in. Experience with a home loan is not a good guide to how a commercial application will go.
How long does it take?
Longer than most other business finance, because a valuation and legal work to establish the security are both involved. Build that into any settlement timetable rather than assuming it will move quickly.
Do you arrange home loans?
No. We only match finance used wholly or mainly for business purposes. A loan for a home to live in is consumer credit and falls outside what we do.
Related finance types
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