Commercial Real Estate Financing: A Complete Guide
Commercial real estate financing works differently from a standard home loan — different lenders, different assessment criteria, and different loan structures. Whether you're buying premises for your business or investing in commercial property, here's what you need to know before you apply.
Important: This article is general information only and does not take into account your personal or business circumstances. Please seek independent financial advice and speak with a commercial finance broker before making decisions.
What Is Commercial Real Estate Financing?
Commercial real estate financing is a loan used to purchase, refinance, renovate, or develop property used for business or investment purposes — such as offices, retail shops, warehouses, industrial sites, or mixed-use buildings. It's distinct from residential lending because lenders assess the deal differently, often weighing the property's income potential and the borrower's business position alongside the usual credit checks.
Key takeaway: Commercial lenders generally look at three things — cash flow, character, and collateral. A strong rental yield or business cash flow can matter as much as your personal credit history.
Types of Commercial Real Estate Financing
- Owner-occupier commercial loans — for businesses buying premises they'll operate from
- Commercial investment loans — for buying property to lease out to tenants
- Construction and development finance — for building or substantially renovating commercial property
- SMSF commercial property loans — for buying commercial property through a self-managed super fund
- Low doc commercial loans — for self-employed borrowers or businesses without full standard financials
How Is Commercial Financing Different From Home Loans?
| Commercial Property Loan | Residential Home Loan | |
|---|---|---|
| Typical LVR | 65% – 80% | Up to 95% (with LMI) |
| Assessment focus | Cash flow, business position, property income | Personal income and expenses |
| Loan terms | Often shorter, more variable structures | Typically up to 30 years |
| Rate type | Often variable or shorter fixed terms | Wide range of fixed/variable options |
Important: Because commercial lenders typically require a larger deposit (lower LVR), it's worth planning your deposit and cash flow position well before you start looking at properties.
What Documents Do You Need?
- Business financial statements (typically 2 years)
- Tax returns for the business and/or individual applicants
- A business plan or cash flow forecast, particularly for owner-occupier purchases
- Details of the property, including any existing lease agreements if tenanted
Do You Need a Guarantor?
Depending on the lender, the loan structure, and the strength of your business financials, some commercial finance applications require additional security — including, in some cases, a business loan guarantor.
Financing Commercial Property in Melbourne
Melbourne remains one of Australia's largest commercial property markets, and local factors — precinct, property type, and zoning — can all affect your financing options and the lenders willing to consider your deal.
How Be Smart Finance Can Help
Commercial finance has more moving parts than a standard home loan, and not every lender assesses deals the same way. We can help you:
- Compare commercial finance options across a broad panel of lenders
- Structure your application around your business's cash flow and financials
- Understand deposit and LVR requirements for your specific property type
- Navigate guarantor requirements if they apply to your deal
Frequently Asked Questions
How much deposit do I need for commercial property finance?
Typically 20–35% (an LVR of 65–80%), though this varies by lender, property type, and whether you're an owner-occupier or investor.
Can I use my SMSF to buy commercial property?
Yes, subject to specific SMSF lending rules and structures — speak with a broker experienced in SMSF commercial lending.
Is commercial property finance harder to get than a home loan?
It's assessed differently rather than simply "harder" — lenders weigh business cash flow and the property's income potential alongside standard credit checks.
Exploring Commercial Property Finance?
Book a free chat with Be Smart Finance and we'll help you compare your options.
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Got Questions?
Commercial Finance FAQs
Common questions about commercial real estate financing, answered.
Commercial Finance FAQs
Common questions about commercial real estate financing, answered.
Typically 20–35% (an LVR of 65–80%), though this varies by lender, property type, and whether you’re an owner-occupier or investor.
Yes, subject to specific SMSF lending rules and structures — speak with a broker experienced in SMSF commercial lending.
It’s assessed differently rather than simply “harder” — lenders weigh business cash flow and the property’s income potential alongside standard credit checks.
It’s possible with some lenders, but deposits below 20-25% typically mean a smaller pool of options and closer scrutiny of your business financials and the property’s income potential.
Owner-occupier loans are for businesses buying premises they’ll operate from, while investment loans are for properties you’ll lease out — lenders often price and assess these differently.
