A commercial lender is lending against an income stream with a building attached. The length of the lease, the strength of the tenant and the cover the rent gives the interest matter more than the purchase price. Most commercial surprises are lease surprises.
We arrange commercial property lending for owner-occupiers, investors and SMSFs, across standard and specialised assets. Our commercial credit team runs every deal.
Who this is for
- Business owners buying their own premises
- Investors buying commercial property for yield
- SMSFs buying commercial property
Who it is not for
- Anyone whose ATO tax portals have been out of order for more than 12 months
- Buyers with no deposit or equity
What lenders look at
Commercial credit is assessed on the income the property produces and how reliable that income is. The building is second.
- Lease terms. Length, options, rent reviews and who pays the outgoings
- Tenant quality. Who is paying the rent and how likely they are to keep paying it
- WALE. Weighted average lease expiry across the tenancies
- Interest cover. How many times the net rent covers the interest
- Security type. Office, retail, industrial, or a specialised asset assessed case by case
- Lease-doc versus full-doc. Whether the lease alone supports the loan, or your full financials are needed
- Clear ATO tax portals for every individual and entity on the application
Loan size and timing
Owner-occupied commercial property typically runs at 70% to 80% LVR. Investment commercial property typically runs at 60% to 70%. Specialised assets, where the building suits one use and few buyers, are considered case by case and usually sit lower.
The slow parts are the valuation and the lease documentation. A commercial valuation takes longer than a residential one and the valuer will want the leases, the outgoings and the tenant history. We assemble that before the application goes in.
Before anything else: Clear ATO tax portals across every individual and entity involved. Lenders check this early, so we check it first.
The mistake we see most
Buying on yield without checking how long the lease actually runs. A property showing 7% looks strong until you find the tenant's lease expires in eleven months with no option, and the lender has priced the loan on that expiry rather than on the yield. Read the lease before the offer. The yield is a function of the lease, not the other way round.
A real example
A business owner was leasing premises on a lease the landlord would not extend, and wanted to buy rather than move. The purchase was structured as owner-occupied commercial lending, with the business as tenant on an arm's length lease to the holding entity. The lender assessed the business's own trading as the income behind the loan. The business now pays rent to itself. Identity not disclosed.
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How we work
Commercial deals run through our commercial credit team from the first call.
- 15-minute fit callWith our team. We learn the property, the lease and what the purchase is for, and whether it is fundable. If it is, we book you a Discovery Call with Dion.
- Discovery Call with DionA free 30-minute conversation about where you are, where you want to get to and what has to be true first. If we can help, we say how. If we cannot, we say that too.
- Finance StrategyThe written plan: owner-occupied or investment treatment, lease-doc or full-doc, the entity that should buy, the LVR the lease supports and the lender whose policy suits the asset.
- ImplementationWe lodge, manage the commercial valuation and the lease questions with the lender and run it through to settlement.
Access to a wide panel of major banks, non-banks and specialist lenders through Connective, plus off-panel lenders where the deal needs it.
What it costs
The fit call and the Discovery Call cost nothing. The Finance Strategy is a one-off fee for the work of designing the structure: the entity, the lender sequence, the splits and the order of moves. We quote it on the Discovery Call, once we know the scope. If the strategy does not leave you knowing exactly where you stand and exactly what to do next, the fee is refunded in full.
Common questions
Can I buy my business premises with the business as tenant?
Yes. It is the most common owner-occupied commercial purchase. The holding entity buys, the business leases on arm's length terms and the lender assesses the business's trading as the income behind the loan.
What LVR can I get on commercial property?
Typically 70% to 80% owner-occupied and 60% to 70% for investment. Specialised assets are assessed case by case and usually sit lower.
What is a lease-doc loan?
A loan assessed on the lease income alone, without your full financials. It suits investment property with a strong tenant and a long lease. The LVR is usually lower than a full-doc loan on the same property.
Can my super fund buy commercial property?
Yes, and it is the purchase SMSF lenders are most comfortable with. See our SMSF property loans page for how the fund side works.