Will you lend to me if my security is a shop, factory or warehouse?

Is commercial property good security?

Yes. Commercial property is a well-established form of security for business lending. Property-secured business loans from $20,000 to $5,000,000 can be secured by first mortgages, second mortgages or caveat loans over commercial as well as residential property.

What changes is how a lender looks at it. A home in a suburb has a huge pool of potential buyers. A commercial building’s pool depends on its use, location and condition — so lenders take a closer look.

What do lenders assess in a commercial property?

Factor	What they’re asking
Type	Shop, office, industrial unit, warehouse, mixed use, specialised?
Location	Is it in an active commercial area with demand?
Zoning and use	Is the current use allowed, and flexible?
Occupancy	Owner-occupied, leased, or vacant?
Lease quality	Tenant strength, lease term remaining, rent
Condition	Age, maintenance, any compliance issues
Existing debt	What’s owed on the first mortgage, if any
Title	Freehold, strata, leasehold — and any restrictions

A strata industrial unit in a busy estate with a long-term tenant is a very different proposition from a single-purpose processing plant in a small town. Both can be lent against; they’ll just be viewed differently.

Own commercial premises and need business funds? Tell us about the property — 60 seconds, no credit check to enquire.

Owner-occupied versus leased — does it matter?

Owner-occupied. Your own business trades from the property. The lender looks at the property and your business’s trading, because if the business struggles, the property’s occupant is affected too. Many owners use equity in their premises to fund equipment, stock, expansion or to clear an ATO debt.

Leased to a tenant. The property earns rent from someone else. A reliable tenant with plenty of lease term remaining supports the security. The lender may want to see the lease.

Vacant. An empty commercial building is harder, because it isn’t producing income and may take longer to lease or sell. Expect a more conservative view.

Who owns it matters too

Commercial property is often held outside the operating business — in a family trust, a self-owned property company or by the owners personally. That’s fine. The owner needs to agree to give the security, and if a trust holds it, see our page on property in a trust for what the lender checks in the deed.

What exit plans suit commercial property?

• Refinance to a longer-term commercial facility once the business’s figures support it.
• Sale of the property, or part of a portfolio.
• Rental income from a tenant that helps service the debt.
• Trading income from the owner-occupier business.

Our page on equity with low income explains why lenders put so much weight on a clear exit.

An illustrative example

For illustration only; not a real business.

A family-owned printing company operates from a warehouse it owns through a related company, with no debt on it. The business wants $600,000 to buy a competitor’s customer list and equipment, and to fund the transition.

• The related company agrees to give a first mortgage over the warehouse.
• The lender looks at the warehouse’s location in an established industrial area, its condition and a valuation.
• The printing business’s trading and the purchase plan support the purpose. The exit is a refinance to a bank after two years of combined figures.

What if my property is unusual?

Specialised commercial property — purpose-built plants, properties with heavy fixed equipment, or buildings in thin markets — can be harder. So can land without buildings; see vacant or rural land. A real person can tell you quickly whether your property suits the lenders we work with.

Can I buy premises with this kind of loan?

Buying business premises is a business purpose, and property-secured lending can play a part. There are two common patterns:

• Using equity in existing property — your home or other premises — to fund a deposit or the full purchase, with the new premises added as security once bought.
• Short-term funding to settle while a longer-term commercial loan is arranged, where timing matters.

Either way, the lender will look at both properties, the business’s trading and the plan to move into longer-term finance. Stamp duty and other purchase costs vary by state and are set by each state’s revenue office, so factor them into your budget.

If you’re buying premises to trade from, business.vic.gov.au and other state business sites have practical checklists on choosing and buying premises. And if you already own premises and simply want to unlock equity for growth, stock or clearing tax, the approach on this page applies directly.

For premises owned by a family trust or company, see property in a trust. If the property is land rather than a building, vacant or rural land explains how lenders see it. And if you’re asset-rich but light on income, read equity with low income.

A practical note on leases: if a tenant occupies the property, keep a current copy of the lease, the rent roll and any recent correspondence about renewals handy. If your own business occupies it through a related entity, a simple written lease between the two is worth having. Clear occupancy paperwork helps the valuer and the lender understand the property quickly.

Put your premises to work

Commercial property can be one of the most useful assets a business owner has. Let’s see what it can do for your plans.

You can ask without any credit check, and we won’t spray your details across a crowd of lenders — one real person handles your enquiry and calls you. Please be accurate on the form about the property type, who owns it and what’s owed, so we can match you with the right option on the first call. Start your enquiry.