Commercial Property Loans: What to know before applying

June 22, 2021

If you’re at the stage of purchasing a commercial property for your business, this is an exciting time! Yet you may feel that a lot is weighing on your decisions. Not only will you be searching for a property that best suits your business needs and growth but also the best type of loan for your circumstances. 

The property you buy could be the largest asset your business owns and while a commercial property loan can help you achieve your business goals, the size of the investment makes it all the more important to make the right financial decisions, that’s where we come in. We’ve compiled a list of things you should know about before applying for a loan.

Types of Commercial Properties

There are a range of property types that can be utilised as commercial premises for your business depending on your industry. Step one is to decide which one is best suited to your business growth and goals.

Types of Commercial Properties include:

  • Factories
  • Warehouses
  • Office spaces
  • Retail outlets
  • Industrial sites
  • Residential unit blocks
  • Restaurant spaces

Once you’ve decided on the type of commercial property, it’s time to think about your finances. There are a few considerations business owners should keep in mind when choosing a commercial property loan.

Commercial Property Loans Considerations

  • Turning to the bank to apply for a loan, whether in person or online, isn’t always the best choice. First, to ensure the right legal structure is set up, speak to your accountant or financial planner for advice on the best purchasing entity for you to buy the property under. Secondly, consider working with a finance broker. During the loan application process, you’ll gain a partner that can offer; more choice, industry experience and specialised qualifications.

  • The amount you borrow will build interest at a fixed or variable rate so make sure to decide on the loan with your long term business goals in mind. Your finance broker is an important asset to have at this time. They can offer you peace of mind on which loan is the best choice for you and have access to relevant information and resources to ensure your decision is informed and you are confident in your choice.

  • There are a range of factors that can impact the approval of your application which you should be aware of. These can include the type of property you’re looking to purchase, its location and whether there is any demand in properties of its kind for potential tenants.

  • When applying for a commercial property loan you’ll need to specify the purpose of the loan. If you are buying a commercial property as an investment to then lease out to a third party you may be considered a low-risk borrower, resulting in better interest rates.

  • If you’re looking to be an owner-occupier for your own business a lender may classify you as posing a higher level of risk depending on your legal structure. This could result in stricter lending criteria and a higher interest rate. In saying this, your finance broker will be there along the way to make the application process as seamless as possible. 

When it comes to commercial property purchase loans, Kudos Money has your back. If you’re not sure which finance options are the best for you and your business, Contact Us. We’re here to help!

Alternatively, if you’re looking for more information on how Commercial Loans can help your business grow, check out our blog here.

Kudos Money Aust Pty Ltd ACN 644 339 444 is an Authorised Corporate Credit Representative (527061) under LM Broker Services Pty Ltd Australian Credit Licence 517192.

The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.