Commercial Property Loan Types

We help Australian business owners and commercial property investors access the eight main types of commercial property loans:

• Commercial property purchase loans, which help you buy existing properties with competitive rates.
• Owner-occupier commercial property loans, which help business owners secure their own commercial premises.
• Commercial construction loans, which provide progressive drawdowns for building and renovating commercial properties.
• SMSF commercial property loans, which use limited recourse borrowing arrangements with up to 80% LVR.
• Commercial property development finance, which funds subdivision and multi-unit projects.
• Commercial property bridging loans, offering short-term commercial property transitions.
• Mezzanine finance tops up funding to 90% of project costs.
• Commercial property loan refinancing, which improves existing loan terms or accesses equity.

Each loan type serves different business objectives. Owner-occupiers typically use purchase or construction loans for their business premises. Investors often leverage SMSF or development finance structures for wealth building.

Each of our commercial property loan types is designed to suit different needs and objectives. Choosing the right commercial loan type for you will depend on your immediate goals and long-term strategy. In our experience the final decision usually comes down to four key factors:

• How do you intend to use the commercial property (business premises or investment)?
• How much available capital do you have (deposit and costs)?
• What’s your timeline for securing finance (immediate purchase or future development)?
• What’s your exit strategy (long-term hold or short-term flip)?

For business owners buying premises, owner-occupier purchase loans offer the best rates and terms. Property investors typically choose between standard purchase loans for existing buildings or development finance for value-add projects. If you’re using super funds, SMSF commercial loans provide tax advantages despite slightly higher rates.

We often structure combinations – for example, bridging finance for quick settlement followed by permanent financing, or commercial construction loans that convert to standard mortgages upon completion. Call 1300 262 098 to ask our team about modeling different scenarios to show you the real costs and benefits of each option.

Yes, we can help you strategically combine different commercial loan types to optimise your financing structure. Many of our clients arrange multi-tiered financing that maximises leverage, while managing risk and cost.

Common combinations we see include using mezzanine finance to top up a standard first mortgage to 85-90% LVR, or starting with bridging loans for speed then refinancing to permanent finance. For developments, you might use land purchase loans initially, then construction finance for building, finally converting to a commercial mortgage upon completion.

We also help clients use SMSF loans for part of the purchase while using conventional finance for the balance, maximising tax benefits while maintaining flexibility. The key is ensuring all facilities work together without cross-default provisions that could create problems later.

Owner-occupier commercial property loans typically offer lower interest rates (0.5-1% less than investors only), as well as higher loan-to-value ratios (up to 80% LVR). Loan terms can also be longer (up to 30 years) because lenders view premises that will be occupied and used by the business owner themselves as lower risk. These loans include both commercial mortgages for purchase as well as construction finance for any custom-built facilities.

Investment commercial property loans typically focus on rental yield (which can be 6-8% for commercial properties). They usually require stronger serviceability calculations, and include specialised options like SMSF loans and mezzanine finance. Investors can also access property development finance for projects and bridging loans for opportunity purchases, though these carry higher rates due to increased risk.

While both of these commercial loan types are designed to provide you with leverage, bridging finance and mezzanine finance serve different purposes. Bridging loans are short-term (typically 6-12 months) solutions for timing gaps – buying before selling, auction purchases, or covering deposits while arranging permanent finance. Rates are higher than standard commercial real estate loans, but you’re only paying for the short period needed.

Mezzanine finance however is designed to sit behind your first commercial mortgage, topping up funding to 85-95% of project costs. It’s typically used for developments or major acquisitions where you need maximum leverage. While more expensive, mezzanine funding enables deals that wouldn’t otherwise be possible.

We find bridging suits urgent opportunities or timing mismatches, while mezzanine works for experienced operators undertaking profitable projects who can handle the higher costs. Both require clear exit strategies which we can help you plan before proceeding.

Commercial property finance approval usually occurs within 4-6 weeks from application, though we can achieve much faster approvals for straightforward transactions that have complete documentation.

The timeline varies significantly based on loan complexity. Standard owner-occupier purchases with major banks average 4-5 weeks, while SMSF commercial property loans may take 5-6 weeks due to additional trust structures. Development finance typically requires 6-8 weeks given detailed feasibility assessments. Private lenders can move faster – often settling in 2-3 weeks when speed is critical.

What affects your timeline? Property valuations (3-7 days), legal documentation review (5-10 days), and lender due diligence processes all impact approval speed. Having complete financial statements, clear property details, and working with experienced brokers who know each lender’s requirements can reduce approval times by 30-40%. 

Generally speaking, you cannot live in a commercial property as your primary residence due to zoning restrictions and council regulations. Commercial properties are usually zoned for business use, lacking residential certificates of occupancy, and are potentially missing essential residential safety requirements like proper fire exits, ventilation systems, and bathroom facilities that are needed under residential building codes.

However, some exceptions exist. Mixed-use properties with both commercial and residential zoning allow living above or behind your business – common with shop-top housing or live-work units. Caretaker accommodation within commercial buildings may be another exception. 

Some of our clients have converted from commercial to residential, but have needed to get council approval, and in some cases rezoning. If you need both business premises and residence, consider purchasing a mixed-use property or separate residential property alongside your commercial property purchase. We can structure finance packages covering both properties, potentially using cross-collateralisation for better rates and higher LVRs.

Yes, purchasing commercial property through a trust or company structure is not only possible but recommended for most commercial property investments. Most of our commercial property transactions involve entity purchases, providing the buyer with asset protection, tax optimisation, and estate planning benefits that far outweigh the slightly more complex lending requirements.

Company structures offer limited liability protection, potential tax rate advantages (25-30% company tax vs up to 47% personal), easier transfer of ownership through share sales, and clear separation of business and personal assets.

Trust structures (unit trusts or discretionary trusts) provide flexible income distribution to beneficiaries, asset protection from personal creditors, estate planning advantages, and potential land tax benefits.

SMSF structures combine retirement savings with property investment under specific regulatory frameworks.

The key is establishing structures before making offers, as changing purchaser names post-contract can trigger stamp duty issues. We work with specialist commercial property accountants and lawyers who can establish optimal structures while ensuring lending compliance.