Commercial Property Finance

Last updated 03 Oct 2021

Commercial property loans are used to finance the purchase or development of business premises as well as financing commercial or residential property projects and developments.

Commercial property loans differ from residential property loans in that the loan terms and pricing are unlikely to be standardized but depend on the characteristics of the development. An broker experienced in commercial property finance loans can help you negotiate better terms for financing your project.

Key Features

Loan Size

$50k to $50m

Loan Term

1 to 25 years

Interest Rate

4% to 12%

Approval Speed

Slow

Common Uses of Property Finance

Property finance is accessed by businesses ranging from developers and builders building everything from small scale residential properties to huge commercial developments or factories. Commercial property finance is also applicable for businesses looking to purchase office or retail space.

As commercial property loans are secured against property assets, these loans tend to be less expensive than unsecured loans.

There is a wide array of lenders who are keen to lend against property collateral.

Keep in Mind

On the other hand, the loan process may be time consuming and property development loans may have caveats and specific timing requirements that need to be fulfilled.

Pricing will depend on a number of factors including the purpose of the property. Standard commercial properties such as unit blocks, warehouses or office buildings command better pricing than more specialized properties such as schools, vineyards or supermarkets.

Who Qualifies for Commercial Property Finance?

Similarly to a secured business loan, lenders will firstly look at the quality of your collateral in terms of the property or development and its value.

Lenders will also look at your current and historical financials and operating history as well as your credit history.

Several years of operating history as well as proof that current or projected cash flows will easily cover your interest expense will result in better loan pricing.

Advantages & Disadvantages

Lower interest rates

Long loan term

Lengthy and time consuming approval process

Non-payment could result in loss of property

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