Commercial property finance: how a lender reads the asset, the lease and you.
Reviewed by Dayan Kasturiratna, Australian Credit Representative 394747, on . Updated .
A commercial property assessment considers the borrower’s repayment capacity, the property and the proposed loan structure. That changes the paperwork, the loan size and the term. This guide sets out what the lender looks at and in what order.
General information, current at September 2026. Schemes, thresholds and lender policies change; the guide says where to check each one.
What makes a loan commercial
The loan is commercial when the security is commercial property, meaning an office, shop, warehouse, factory, medical suite, childcare centre or similar, or when the borrower is a business and the purpose is business use, even where the security is a home. National Credit Code coverage depends on the borrower, credit purpose and statutory conditions, not the property label alone. Check the proposed transaction’s coverage before relying on particular protections. It does not change the assessment: the lender still verifies income, still values the security and still expects the loan to be repaid from identifiable cash flow.
Loan to value, and why it is lower
The deposit and permitted loan to value ratio depend on the property, borrower and lender’s assessment. The proportion depends on the asset: a standard office or industrial unit in a metropolitan area attracts a higher ratio than a specialised asset such as a childcare centre, petrol station or a regional shop, because the specialised asset has fewer buyers if the lender ever has to sell it. Tenant quality, lease length and location move the figure as well. The consequence is a larger deposit or more equity from elsewhere, and it is the first number settled in any commercial assessment.
The income test: interest cover and the business
For an investment purchase the lender tests whether the net rent covers the interest, and by how much, expressed as an interest cover ratio. The rent is taken from the lease, discounted for outgoings the landlord carries, and stress tested at a higher rate. Lease length matters: a tenant with two years left on a five year lease is a different proposition from one with two years and two options. For owner-occupied premises, the lender assesses business cash flow and commitments. Rent no longer payable is one part of that assessment.
Full doc, lease doc and low doc
A full documentation assessment uses the financial records and supporting evidence required by the lender for the borrower and relevant guarantors. A lease doc assessment relies primarily on rental income, but the lender still sets the borrower, security and supporting-document requirements. Low doc options for self-employed borrowers use BAS, bank statements or an accountant’s declaration. Costs and lending limits depend on the product, evidence available and lender assessment. None removes the assessment.
GST, the margin scheme and going concerns
Check whether GST is payable under the transaction and contract, and how any payment will be funded. Any entitlement to a later GST credit needs separate confirmation. A leasing enterprise may be sold GST-free as a going concern only if all statutory conditions are met; an existing lease and a written agreement alone are not enough. The margin scheme changes how the seller’s GST is calculated. These are questions for your accountant and lawyer before the contract is signed, and the answer decides how much the loan has to be.
Owner-occupied: buying the premises your business rents
Whether buying premises is suitable depends on the business’s needs, finances and risks. The loan is assessed on the business, the deposit usually comes from business cash or equity in other property, and the term is set to suit the business rather than a household. Where the superannuation rules permit it, business premises may be owned by the fund and leased to the business at market rent. The fund bears the associated costs and investment risks. That route has its own rules, covered in the SMSF guide, and needs licensed financial advice on the fund itself, which we do not provide.
Terms, reviews and what happens at year three
Commercial loans commonly run for shorter terms than home loans and many carry an annual or periodic review, at which the lender may ask for updated financials, a revaluation or a lease update. Some facilities mature after three or five years. Any renewal or refinance is subject to assessment and is not guaranteed. Knowing the review conditions before signing, and planning for the refinance point rather than being surprised by it, is part of the structure.
What a lender will ask for.
Gathered with your agreement, after the first conversation and before anything is lodged.
- Two years of financial statements and tax returns for the borrowing entity and guarantors, or lease and BAS for lease doc and low doc
- The contract of sale, the lease and any options, and the outgoings schedule
- A rent roll and tenancy schedule for multi-tenanted property
- The entity structure: company, trust or SMSF, with the trust deed where relevant
- Existing loan statements and a schedule of property held
- GST registration details and your accountant’s advice on the GST treatment
Tools that show their method.
What will the repayments be?
Loan repayments calculator: principal and interest, interest-only for a period, weekly or monthly, with or without extra repayments.
OpenToolWhat will the government charge?
Stamp duty calculator: estimate applicable transfer duty and check the relevant state rules, exemptions and limitations. For Victorian commercial or industrial property, confirm the property’s tax-reform status and applicable duty and ongoing property taxes with your adviser.
OpenAsked about this topic.
How much deposit do I need for a commercial property?
More than for a home. Lenders lend a lower proportion of value on commercial property, and the proportion depends on the asset type, tenant, lease and location. Specialised assets need more equity than standard offices or industrial units.
What is a lease doc loan?
An investment commercial loan assessed on the lease alone, where the rent covers the interest by the lender’s required margin, so the borrower’s own financial statements are not required. It usually costs more in rate or ratio than a full doc loan.
Can my business buy its premises through my SMSF?
Business real property can be bought by a self-managed super fund and leased to the members’ business at market rent, using a limited recourse borrowing arrangement. We arrange the lending; whether to do it is a question for a licensed financial adviser and your accountant.
Is GST payable on a commercial property purchase?
Usually, unless the sale qualifies as a going concern or another exemption applies. The GST affects how much needs to be funded. Take advice from your accountant before the contract is signed.
From the archive, on this topic.
Articles from the Opulent Finance archive, kept at their original addresses with their original dates. Older articles reflect the rules at the time they were written and are not updated by this guide; this guide is the current position.
Where the facts on this page come from.
- GST and property (ATO)
- National Consumer Credit Protection Act 2009, section 5 and the National Credit Code (Federal Register of Legislation)
- Limited recourse borrowing arrangements (ATO)
Prepared by Opulent Finance. The facts above were checked against these sources on 8 September 2026. This page is general information; it has not been reviewed by the licensee’s compliance function and is not credit assistance. Credit assistance at Opulent Finance is provided by Dayan Kasturiratna, Australian Credit Representative 394747, under Australian Finance Group Ltd, ACL 389087. Sources change: where a scheme, threshold or rule matters to your decision, check the source on the day.
When the reading raises a question, ask it.
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The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.
