Commercial Property Loans
Property Loans for SMEs
Lender credit policies, terms, conditions, and interest rates are difficult to find on lender websites. The underlying reason for this is that most commercial loans are assessed on a “risk for rate” basis. The risk for rate assessment is based on the lender’s risk appetite of any given client and any given lending proposal. So all terms and conditions are assessed on a case by case basis.
Quite often, lenders will quote a range of interest rates: from…to… Many of the terms & conditions can be negotiated, particularly by your broker.
So which lender is best for your commercial purchase? It depends on many factors.
Some qualifying questions you will be asked by your broker/lender:
- What is the reason for the purchase or refinance & what is the strategy?
- How many years has the business been operating?
- Are the business & the directors taxes paid & up to date?
- Are there are any exceptional circumstances or expenses?
- Clients will be required to provide a minimum of two years tax returns and financial statements.
- Generally, the maximum LVR is 70%* with only commercial security
- Normally the maximum LVR is 80%* with only residential security
- A good & unblemished credit record will assist in negotiating a competitive interest rate.
- Are you renting/leasing or are you the owner of the premises?
*Exceptions can apply for some professional groups.
General guidelines on maximum loan amounts from most lenders are:
- 80% of the property value for loans up to $1,000,000.
- 75% of the property value for loans up to $2,000,000.
- 70% of the property value for loans up to $5,000,000 & above.
The type of commercial property loan and nature of your security, will have an effect on the amount that you can borrow.
Lenders will generally accept additional security of either residential or other commercial property. This allows borrowers to obtain loans up to 100% of its purchase price or value.
Lease Doc, Low Doc, and Alt Doc loans will generally require a larger deposit or greater equity, as will “specialised” security properties.