Commercial Property Loans: How They Work and What You Need to Know
Whether you’re expanding your business, investing in a new venture, or buying your first commercial property, commercial loans open the door to major opportunities. But they can also feel a bit more complex than your standard home loan – different rules, different requirements, and often, much bigger numbers involved.
At XploreFS, we specialise in making the commercial loan process straightforward. Here’s what you need to know before taking the next step.
What Is a Commercial Loan?
A commercial loan is a type of finance used to purchase property that’s intended for business purposes – think warehouses, office spaces, retail shops, or large residential complexes like unit blocks. Unlike a typical home loan, commercial loans are designed for borrowers who want to either run a business from the property or invest in commercial real estate for income.
These loans can also fund construction or renovations, giving business owners flexibility to expand their operations.
How Are Commercial Loans Different from Home Loans?
One of the biggest differences is how lenders assess risk. Residential loans are typically more straightforward because the property is your home. Commercial loans, on the other hand, involve more scrutiny. Lenders look at factors like the type of property, your business’s financials, the commercial market outlook, and the potential rental income (if you’re investing).
You’ll also find that commercial loans often come with:
Higher interest rates than standard home loans
Shorter loan terms – typically between 1 and 15 years
Lower loan-to-value ratios (LVRs), meaning you may need a bigger deposit (often 30% or more)
How Much Can You Borrow with a Commercial Loan?
There’s no one-size-fits-all answer. How much you can borrow depends on several things, including the property type, your business income, and your deposit. For well-established businesses with strong financials, borrowing can stretch up to 70% or even 80% of the property’s value. However, smaller businesses or start-ups may face tighter restrictions.
At XploreFS, we help you understand your true borrowing power upfront – so you’re clear on what’s realistic before making any big decisions.
How Do Commercial Loan Repayments Work?
Most commercial loans offer flexible repayment options, including principal and interest, interest-only, or even balloon repayments (where a lump sum is due at the end of the term). The repayment structure you choose can significantly impact your cash flow, so it’s important to pick one that aligns with your business goals and income patterns.
Unlike home loans, commercial lenders can be much stricter if repayments are missed, and some have different rules around early exits or refinancing—so reading the fine print matters.
What’s the Process for Getting a Commercial Loan?
The process is similar in structure to a home loan but usually involves more documentation. Expect to provide:
Full financials for your business (balance sheets, profit & loss statements)
Tax returns (both personal and business)
Details of the property and valuation reports
Business plans or lease agreements (if relevant)
Because of the complexity, approvals may take longer—but working with a broker ensures your application is packaged professionally and hits the mark first time.
Why Use a Broker for Commercial Loans?
Not all lenders have the same appetite for commercial lending, and the differences between their offers can be huge. A broker gives you access to a wider pool of lenders, many of whom have specialist products tailored for different industries or property types.
At XploreFS, we’ll walk you through the market, explain the pros and cons of each option, and negotiate terms that support your long-term business goals.
Is Now a Good Time to Buy Commercial Property in Brisbane?
Commercial property has seen a resurgence in Brisbane and other major cities as businesses look to secure long-term premises and investors seek high-yield opportunities. While interest rates and market conditions can fluctuate, a well-structured commercial loan can give you the leverage to grow your wealth over time—especially if you’re entering with a smart strategy.
Get Started with Confidence
Whether you’re buying your first commercial property or adding to your existing portfolio, the right finance can make or break your investment. XploreFS is here to guide you through the process, handle the paperwork, and make sure you secure a loan that works for your business.
Contact us today to explore your options and find out how we can help you achieve your commercial property goals.
Frequently Asked Questions About Commercial Property Loans
What’s the difference between a commercial property loan and a residential mortgage?
A commercial property loan is used to purchase or refinance properties intended for business use—like offices, warehouses, or retail spaces. Residential mortgages are strictly for personal housing. Commercial loans usually have stricter lending criteria, shorter terms, and higher interest rates because they’re seen as riskier by lenders.
How much deposit do I need for a commercial property loan?
Most lenders require a deposit of 20% to 30% of the property’s value for a commercial loan. However, in some cases—particularly for owner-occupied properties or strong applicants—it may be possible to secure a loan with a slightly lower deposit. A broker can help assess your situation and find the most competitive options.
Can I buy a commercial property through my SMSF?
Yes, many Australians use their Self-Managed Super Fund (SMSF) to invest in commercial property. This is a popular strategy, especially for business owners who want their SMSF to own their business premises. It’s important to follow strict compliance rules, so professional advice is essential before proceeding.
How is my borrowing power calculated for a commercial loan?
Lenders assess your borrowing power by looking at the potential income of the property, your business’s financials (if owner-occupied), your credit history, and your overall financial position. Factors like lease agreements, tenant quality, and property type also play a big role in determining loan size and terms.