Commercial & Business Finance
Commercial lending runs on different rules from residential. Shorter terms, closer scrutiny of the business, and far more variation between lenders on the same deal.
Different Rules, Wider Spread of Outcomes
Residential lending is relatively standardised. Commercial lending is not — two lenders looking at the same business and the same property can reach very different conclusions about terms, structure and whether they want the deal.
That variation is the reason to compare properly rather than approach whoever holds your business banking. It is also why preparation matters: a well-presented submission changes the answer more than it does on a home loan.
- What the facility is actually for, which determines its shape
- How the business trades, and whether the financials show it clearly
- What security is available, and how it will be valued
- The term and review structure, which are shorter than residential
- Whether directors will be asked for personal guarantees
- Which lenders genuinely want this industry and this asset type
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The Range of Facilities
Commercial finance covers a wider set of needs than a home loan, and the right structure depends on what the money is doing.
- Commercial property purchase — offices, retail, industrial and warehouse, whether owner-occupied or investment.
- Business acquisition, where the lender assesses the business being bought as well as the buyer.
- Working capital and overdraft facilities for cash-flow timing rather than long-term funding.
- Equipment and asset finance for vehicles, plant and machinery.
- Development and construction finance, assessed on the project and drawn in stages.
- Refinancing existing commercial debt, often at review when terms are being reset.
Where a residential facility would genuinely serve you better — which happens more often than you might expect — we will say so.
What Commercial Lenders Look At
The business is the borrower, so the business is what gets examined. Financials that are current, consistent and explicable do more for an application than almost anything else.
- Trading history and financial statements, generally two to three years, with any unusual movements explained.
- Servicing capacity, calculated from business cash flow rather than personal income.
- The security property, valued on commercial rather than residential criteria — tenancy, lease terms and quality all matter.
- The industry itself, which affects lender appetite independently of how well the business performs.
- Directors' personal position, since guarantees are the norm rather than the exception.
- Tax compliance — outstanding obligations are a common and avoidable obstacle.
Where the financials do not yet tell the story clearly, it is often worth working with your accountant before approaching a lender rather than after a decline.
Shorter, Reviewed, and Less Standardised
Commercial facilities generally run on shorter terms than residential ones and are subject to periodic review. That review is a genuine event — terms can change, and the facility is reassessed rather than simply continuing.
Because the spread between lenders is wide, the same proposal can produce materially different offers on structure, term and conditions. Comparing properly is worth more here than on a residential loan.
- Shorter terms with scheduled reviews
- Covenants and reporting obligations that need to be met on time
- Valuations assessed on commercial criteria, including tenancy quality
- Personal guarantees from directors as standard
- Facility structure varying considerably between lenders
We map the review points and obligations at the outset so a renewal is something you plan for rather than something that arrives.
The Process, Step by Step
- Requirement and structureWhat the facility is for, and what shape actually suits it.
- Financial reviewYour financials examined the way a credit assessor will, with gaps identified early.
- Lender selectionNarrowing to lenders with genuine appetite for this industry, asset and structure.
- SubmissionA prepared proposal that answers the questions a credit team will ask, before they ask them.
- Approval and settlementConditions, valuations and documentation managed through to drawdown.
What to have ready
- Two to three years of business financial statements
- Business and personal tax returns
- Recent business bank statements and ATO portal position
- Details of the property or asset being financed
- Leases and tenancy schedules where the security is tenanted
- Identification and personal financial position for directors
Not all of it is needed on day one. We will tell you what matters first so you are not gathering paperwork you do not need yet.
Common Questions
How is commercial lending different from a home loan?
The borrower is generally a business rather than a person, so trading performance and business cash flow drive the assessment. Terms are typically shorter and subject to review, valuations use commercial criteria, and there is far more variation between lenders on the same proposal.
What deposit do I need for a commercial property?
Generally more than for residential, and it varies with the property type, the tenancy and the strength of the business. Specialised properties usually require more than standard ones. It is worth establishing early, because it shapes what is realistically available.
Can I buy the premises my business operates from?
Yes — owner-occupied commercial property is a common purchase, and lenders often view it favourably because the tenant is known. How it is owned, whether personally, through a trust or through a fund, is a structuring question worth working through with your accountant first.
Do I need personal guarantees?
For commercial lending they are close to standard. Directors are generally asked to guarantee the facility, which is a real personal obligation. It is worth understanding the extent of it, with your own advice, before signing.
How long does commercial finance take?
Longer than a residential loan as a rule. There is more to assess, valuations take longer, and conditions are more involved. A well-prepared submission is the single biggest factor in shortening it.
What if my financials are not up to date?
That is worth addressing before applying rather than after a decline. Lenders generally want current, consistent financials, and outstanding tax obligations are a frequent obstacle. Your accountant is the right first call, and we are happy to tell them what a lender will be looking for.
Guides on This Topic
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General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here. Sabea Financial, Credit Representative 539 662, ABN 86 653 823 253, is authorised under Australian Credit Licence 391237.