Commercial property loans: who lends to buy business premises

Paying rent to a landlord for years can feel like a cost with no end. Buying your own premises turns that cost into an asset — and gives you control over the site — but it’s one of the bigger financial decisions a business makes. Lenders know it, which is why they look closely at both the building and the business.

Which lenders fund commercial property purchases?

Lender type	Best for	Watch for
Major banks	Established businesses buying mainstream property	Full financials, slower process
Regional and challenger banks	Regional premises, relationship-led files	Smaller appetite for big loans
Non-bank lenders	Lighter documents, specialised property	Higher cost than banks
Private lenders	Bridging to settlement	Short term only

What do lenders check about the property?

• Property type. Warehouses, factories, offices and shops are mainstream. Specialised and single-use properties attract fewer lenders.
• Location. Metropolitan and major regional centres are preferred; remote locations may need more equity.
• Zoning and condition. Permitted use, building condition and any compliance issues.
• Valuation. The lender orders a commercial valuation and lends against that figure, not the purchase price.
• Leases. If part of the building is tenanted, the lease terms and tenant quality.

And about the business?

For owner-occupiers, the business’s income is what repays the loan, so expect the lender to review financial statements, tax returns, BAS, existing debts and your rent history. A business that has paid market rent comfortably for years has a natural argument: the loan repayment replaces the rent.

Curious which lender type would back your purchase? Ask a specialist — no credit check involved.

What purchase costs should you plan for?

Stamp duty on commercial property is set by each state and territory revenue office and varies considerably, as do concessions. Add legal fees, valuation, inspections, loan establishment costs and any GST considerations your accountant flags. Many owners underestimate these and end up short at settlement.

Should the business, a trust or a super fund own the property?

That’s a question for your accountant and lawyer, and the answer affects which lenders you can use. Borrowing through a self-managed super fund, for example, involves specific lending structures and a narrower group of lenders. Settle the ownership structure before you apply.

Why are commercial property loans declined?

• The valuation comes in below the purchase price.
• The property type or location is outside policy.
• Business income doesn’t comfortably cover repayments.
• Financials aren’t lodged or show a declining trend.
• The deposit and costs aren’t fully funded.

What if you also need to build or renovate?

If the purchase involves significant construction or a major fit-out, lenders treat it differently. See who lends for construction and development. If you want to buy using equity in other property, see property-backed loans.

How does buying compare with continuing to lease?

	Buying premises	Leasing premises
Upfront cash	Deposit, stamp duty and costs	Bond or bank guarantee, fit-out
Monthly cost	Loan repayments, rates, insurance, maintenance	Rent and outgoings
Control	Full — fit-out, use, timing	Subject to lease terms
Flexibility to move	Lower	Higher at lease end
Asset built	Yes, subject to the property market	No
Lender view	Repayment replaces rent	Rent history shows capacity

There’s no universal answer. A business that expects to stay in one place for many years and has outgrown landlord restrictions may benefit from buying. A business that may need to move or grow quickly may be better off leasing and keeping its capital for operations.

An illustrative example

Purely illustrative, with no real business involved: an engineering workshop has rented the same light-industrial unit for eight years. The landlord offers to sell. The business has lodged financials showing steady profit, and its rent history proves it can carry a repayment of similar size. A bank lends against the unit with a deposit drawn partly from cash and partly from equity in the owners’ home. The rent becomes a loan repayment, and the business stops worrying about a lease renewal.

What should you sort out before you sign a contract?

• Talk to your accountant about the ownership structure.
• Have a lender or specialist confirm the property type and location are acceptable.
• Get an estimate of stamp duty from your state revenue office’s calculator.
• Make the contract subject to finance and to a satisfactory valuation.
• Check zoning, permitted use and building condition.

Quick checklist before you approach a lender

• The property address, price and contract terms.
• Two years of business financials, or alternative evidence.
• Evidence of your deposit and purchase costs.
• The intended ownership structure, agreed with your accountant.

If the premises will be partly leased to other tenants, lenders will also look at those leases: the remaining terms, the tenants’ businesses and whether the rent is at market levels. A strong tenant on a long lease can help the application; a vacant section or a short lease can reduce how much a lender will advance. Bring copies of every lease to the first conversation.

How much deposit do you need for a commercial property loan?

Commercial property is usually lent against more conservatively than a home, so expect to contribute a larger share of the price from your own funds or other security. The exact loan-to-value ratio depends on the property type, its location, the lease profile, the lender and the strength of the business. Specialised properties — a purpose-built childcare centre, a service station, a rural processing shed — are harder to sell and may attract a lower ratio still. Many owners bridge the gap by offering a second property, such as equity in their home, as additional security. The borrowing power estimator lets you test usable equity at different ratios.

Owner-occupied or investment premises?

Lenders treat the two differently. If your own business will occupy the premises, the lender looks hard at the business’s trading because the business is effectively paying the rent to itself. If the property is leased to an unrelated tenant, the lender focuses on the lease: the tenant’s quality, the remaining term, the rent and how easily the space could be re-let. Mixed situations — part occupied, part leased — are common and fine, as long as the numbers stack up on both sides. Lenders also check how the property is held: in the operating company, a separate trust or a self-managed super fund. Each ownership structure brings its own documents and lending rules, so settle it with your accountant before you choose a lender.

	Owner-occupied	Leased to a tenant
Main repayment source	Your business’s trading	The tenant’s rent
Key documents	Business financials, BAS, bank statements	Lease, rent roll, tenant details
Main risk lenders watch	Business downturn	Vacancy at lease expiry

Timing the purchase and the finance

Commercial contracts often have tighter finance clauses than residential sales, and valuations for commercial property can take longer. Before you sign, get a lender’s indication on the amount and conditions, allow time for the valuation, and make sure the finance clause gives you room. If you’re buying before selling existing premises, bridging finance can cover the overlap. Budget too for stamp duty, legal fees and the valuation itself, which are usually paid from your own funds rather than added to the loan, and check with your state revenue office for the duty that applies. When you’d like help lining up the right lender before you make an offer, start a 60-second enquiry.

Thinking about buying your premises?

Talk to a lender before you sign, or make the contract subject to finance. Send a 60-second enquiry with the property type, the price and a little about the business, and a lending specialist will tell you which lender type is realistic. Asking doesn’t involve a credit check, your file isn’t passed around a crowd of lenders, and accurate answers mean we can line up the right lender on the first attempt.